Work networks
Illicit financial flows in the mining sector
Background
In recent years there has been growing concern about the
actual level of tax payments made by multinational
enterprises worldwide. Thanks to the accumulation of a high
degree of economic power, these corporations are better able
to adapt to regulatory frameworks and deploy sophisticated
strategies for reducing their overall tax burden. The
corollary is a lessening of countries' ability to retain
fiscal revenues that could be used to finance their
development.
At the same time, the international discussions about the
financing for development of developing countries has raised
the alarm of the growing outflow of capital these countries
have experimented due to illicit financial flows.
Most recently, developing countries have shown an interest in
coordinating efforts in this area, as they are those most
affected by these types of maneuvers due to weak legal and
institutional frameworks as well as fiscal systems and tax
authorities that are less developed. In this regard it is
worth noting the agreement reached at the recent summit in
Addis Ababa (July 2015) in which the member states of the
United Nations committed to redouble their efforts aimed at
substantially reducing illicit financial flows by 2030, with
a view to eliminate them completely, in particular by
fighting against tax evasion and corruption.
In a number of the countries in the region revenue collection
falls in large part on the tax obligations of multinational
enterprises, in many cases deriving from the exploitation of
natural resources. For example, the contribution of mining
revenues during the period 2010-2014 reached 13.8% of total
revenues in Chile and 6.4% in Peru; they were also important
in Bolivia (2.8%) and Suriname (8.8%). Thus it is
fundamental for these economies to limit tax and financial
practices that could artificially diminish their tax bases,
especially that arising from aggressive tax planning by
multinational enterprises operating in the extractive
sector. In the same way, illicit financial flows in various
countries of the region - especially in South America -
could arise from transactions related to natural resources.
In this context, ECLAC is forming a network of policymakers
and analysts (NGOs) aimed at following illicit financial
flows, tax evasion and the extractive sector within the
framework of the project "Illicit financial flows, tax
evasion and the extractive sector" sponsored by GIZ
(Deutsche Gesellschaft für Internationale Zusammenarbeit).
Events
Two regional events of exchange and dialogue about illicit
financial flows, tax eveasion and the extractive have taken
place:
- "Estimating the Tax Non-Compliance in Latin America",
August 23-24 in Lima, Peru as part of the CIAT Tax
Studies and Research Network, where the participants
discussed the impact of illicit financial flows in Latin
America and the Caribbean with an emphasis on capital
outflows generated by the maiuplation of trade prices of
metals and minerals.
- "Sixth LAC Fiscal Policy Forum", September 26-27 in
Buenos Aires, Argentina where the participants discussed
recent international taxation trends, including the
challenges of tax evasion and avoidance in the mining
sector.
Information of interest
Recent presentations:
Related reports and studies:
More about the network
For more information about the network or to join our mailing
list please contact Mr. Michael Hanni at
michael.hanni@cepal.org.
Ibero-American Network of Fiscal Policy Makers
In October 2011, in the framework of the XXI Iberoamerican
summit held in the same year, the Heads of State and
Government tasked the Ibero-American General Secretariat and
the Economic Comission for Latin America and the Caribbean
-- later expanded to include the Development Centre of the
OECD -- to create an Ibero-American Network of Fiscal Policy
Makers and Experts.
The objective of this network is to accompany and to
facilitate work on fiscal policies within the frameowkr of
reforming the State, with the aim of strengthening the
processes of economic development.