Measuring the size of the offshore economy is an exercise in night vision. It is hard to define it; it is fragmented and messy, and it is swathed in secrecy. Official international efforts to measure the various aspects of the phenomenon have been inadequate.
We are concerned above with financial flows that are harmful and abusive, whether or not illegality is involved. So we are concerned with tax avoidance, for example, as well as with phenomena such as tax competition.
This page contains links to a number of studies on global, regional and national estimates of the tax dodging problem.
Tax Justice Network has also produced its own research. We estimate that the global loss to governments from profit shifting by multinational companies is upwards of $500bn per year. As a percentage of their gross domestic product, developing countries are hit hardest.
We also estimate that between $21-32 trillion dollars of private wealth is held offshore. Assuming that the profits on this wealth is undeclared, and a very conservative return on capital of 3%, we estimate that governments are losing upwards of $189 billion a year via hidden offshore wealth.
If you would like to download our briefing on the scale of the tax avoidance and tax evasion problem, you can do so here.
- Jun 2016 – Switzerland is handing back looted money. How big a deal is this?
- May 2016 – More than $12 trillion offshore, from developing countries alone
- Mar 2016 – Ending the Era of Tax Havens (Oxfam / Alex Cobham). Containing two separate scale estimates, one in each of Sections 2 and 3.
- Nov 2015 – The Scale of BEPS: estimating the size of global corporate tax cheating.
- Highlight: July 2012 The Price of Offshore Revisited.
TJN’s in-depth and unprecedented study into the size of the offshore system. Main report here. Also see:
Appendix 1: The pre-history of offshore estimates
Appendix 2: Explaining Capital Flight
Appendix 3: Details. Part 1 (large file); Part 2 (large file)
TJN responds to attack on estimates by Jersey Finance, June 2014.
- May 22, 2013 – Oxfam: At least $18.5 trillion is hidden by wealthy individuals in tax havens worldwide. Original here.
- Illicit Financial Flows from Developing Countries: 2001-2010 – Global Financial Integrity, Dec 2013. Estimating that the developing world lost From 2002 to 2011developing countries lost US$5.9 trillion to illicit outflows, and $954 billion in 2011 alone.
- Gabriel Zucman: the Missing Wealth of Nations Estimates that 8% of the global financial wealth of households is in tax havens, 75% of which is unrecorded. (This ‘unrecorded’ relates to information available to cross-border statistical analysis, rather than to tax authorities.)
- July 2012 – Inequality: You don’t know the half of it: TJN’s assessment of why inequality is much worse than we think, because of offshore secrecy
- Nov 2011 – A Tax Research briefing paper on the $3.1 trillion annual costs of tax evasion worldwide. With country by country breakdown. Original here.
- March 2010. New IMF research showing huge discrepancies between portfolio assets and liabilities in selected offshore centres. E.g. Luxembourg reports portfolio assets of US$1.5 trillion at end-2008 versus portfolio investment liabilities at US$2.5 trillion. The Cayman Islands reports a $750 billion: $2.2 trillion assets-liability split. Click here for more.
- February 2010 – Global Financial Integrity estimate that developing countries lose $98 – $106 billion each year due solely to re-invoicing.
- May 2008 Death and taxes: the true toll of tax dodging,” Christian Aid. Calculating that nearly 1,000 children die every day just from tax evasion.
- May 29, 2013 – Illicit Financial Flows from Africa, 1980-2009. Global Financial Integrity. Between 1980 and 2009, the economies of Africa lost between US$597 billion and US$1.4 trillion in net resource transfers away from the continent. Original here.
- May 24, 2013 – Actionaid: Almost half of all investment into developing countries goes through tax havens. Original here.
- Oct 2012 – Over $800 billion drained from Sub Saharan Africa. Original here.
- March 2009 – False Profits: robbing the poor to keep the rich tax-free, Christian Aid. Between 2005 and 2007, total capital flow from bilateral trade mispricing into the EU and the US alone from non-EU countries is more than US$1.1tn (£581.4bn, €850.1bn.)
- May 2008 – Death and Taxes: the true toll of tax dodging, Christian Aid. Estimates corporate tax losses to the developing world at US$160bn a year (£80bn), more than one-and-a-half times the combined aid budgets of the whole rich world.
- Oct 2012 – Over $450 billion drained from North Africa. Original here.
- Sept 2014 – Tax evasion in 2014 – on the UK Tax gap, Tax Research. Estimating that tax evasion might cost the UK £85 billion a year; tax avoidance might cost of £19 billion and tax not paid £18 billion.
Archive: old reports
- July 2009 the Oxford Centre for Business Taxation challenged research by TJN and allies: that report, and TJN’s response, is here.
- January 2009 – Global Financial Integrity (GFI) in Washington estimated that in 2006, developing countries lost an estimated $858.6 billion – 1.06 trillion in illicit financial outflows.”
- April 2008 – James Boyce and Léonce Ndikumana of the University of Massachusets, Amherst, published new research estimated capital flight from 40 sub-Saharan African countries from 1970-2004 stood at $607 billion in 2004 dollars (including interest earnings), compared to a total $227 billion external debt owed by those countries in 2004.
- March 2005 – Tax Justice Network: The Price of Offshore (now overtaken by The Price of Offshore Revisited.) This 2005 study estimated conservatively that the world’s High Net Worth Individuals (HNWIs) held around $11.5 trillion of assets offshore, and a consequent tax loss of $255 billion
- Sept 2005 – Research by Alex Cobham at the Oxford Council on Good Governance estimated conservatively that poorer countries forego $385 billion annually, due to tax avoidance and tax evasion.
- 2004 – Capitalism’s Achilles Heel. Author Raymond Baker estimates cross-border flows of global dirty money at $1.1-1.6 trillion annually, about half from developing and transitional economies, and two thirds of which is commercial dirty money. His data broke down like this:
|Cross-border flows of global dirty money, US$ bn, annual||Low||High|
|Commercial, of which:||700||1,000|
|Abusive transfer pricing||300||500|
- OECD – Media reports sometimes quote OECD data estimating the total size of offshore wealth held by HNWIs at a much lower $5-7 trillion. The reason for the lower figures seems to be that the reports are quoting very old OECD data; the OECD has cited this number figures since 1998. The OECD uses a narrow definition of offshore.”Developing countries are estimated to lose to tax havens almost three times what they get from developed countries in aid.”
– Angel Gurría, OECD Secretary-General, November 2008