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Capital flight, tax havens and financial regulation

Overview

Illicit capital outflows are a major challenge for states in all regions. According to experts' estimates, crossborder illicit flows from developing countries amount to $1 trillion each year.  More than 60% of these illicit flows are related to corporate tax avoidance and evasion schemes, mostly using tax havens as a conduit. These outflows dwarf official aid to developing countries.

Governments agreed at the 2005 UN World Summit to “support efforts to reduce capital flight and measures to curb the illicit transfer of funds”. Too little is being done to implement these and other commitments. A global binding framework on tax avoidance and evasion is needed. Eurodad is working with members and other allies across Europe and in other regions to improve development outcomes by promoting policies and practices that:

• return stolen wealth;
• remove harmful tax and secrecy practices of tax havens;
• increase regulation of special purpose investment vehicles such as hedge funds, and private equity funds and vulture funds.

Eurodad has launched a Fight Capital Flight Campaign and has published short briefing notes with more on the key issues:

• Speculation undermines the right to food  
• A_European_agenda_to_fight_capital_flight  
• Dangerous derivatives at the heart of the financial crisis