Financial Transparency: Challenges and Opportunities for Developing Countries
April 3rd, 2013
April 3rd, 2013
New Delhi – The Task Force on Financial Integrity and Economic Development (Task Force), in partnership with the Centre for Budget and Governance Accountability, hosted its first Asia regional conference, Financial Transparency: Challenges and Opportunities for Developing Countries, at the India Habitat Centre today.
The highly-anticipated meeting, which focused on the South Asia region, attracted experts from over a dozen countries spread across all continents, intent on fleshing out strategies to curb illicit financial flows and tackle tax haven secrecy. These two issues were seen as especially important because the primary method for moving illicit capital out of Asian countries is trade misinvoicing (accounting for US$3.31 trillion or 93% of Asian illicit outflows).
In remarks at the start of the conference, Task Force director Raymond Baker stated that “although the shadow financial system facilitating illicit financial flows has grown stronger and more damaging over time, it is by no means irreversible. In fact, various international and national organisations are just starting to take steps that could some day result in substantial changes if properly implemented and monitored.”
“India and the whole of South Asia could benefit greatly from some fairly simple reforms such as the implementation of country-by-country reporting of sales, profits and taxes paid by multinational corporations, the automatic cross-border exchange of tax information on personal and business accounts, and requiring that information on the true, human owner of all corporations, trusts, and foundations be disclosed upon formation and be made available to law enforcement.
“For countries like India to reach their full economic potential, safeguards must be put in place to stop money from leaving the country by illicit means” Baker added.
According to the latest report by Task Force member Global Financial Integrity (GFI), the Asia region lost an average of US$344.4 billion per annum in illicit financial flows from 2001-2010. It also accounted for 60.91 percent of the total illicit financial flows from the developing world, with China, Malaysia, the Philippines, and India among the top 10 countries with the highest measured average annual illicit financial outflows over that decade.
At the end of the day-long conference Subrat Das, Executive Director of India’s Centre for Budget and Governance Accountability stressed that “the immediate goal in India should be to take strong policy measures for curtailing the generation and circulation of illicit finances and making it harder for multinational businesses to dodge paying tax, as the country cannot afford to continue to lose significant amounts of legitimate public revenue”.