Trading Hunger - Section 5b - UK demonstration against tax abuse — UK demonstration against tax abuse

help reduce child undernutrition by tackling illicit financial flows

The countries most affected by child undernutrition collectively experienced $310 billion in ‘trade-related illicit financial flows’ (IFFs) in 2024. As a notorious safe haven for illicit finance, the UK plays a key role in allowing these countries to be harmed by IFFs. The Illicit Finance Summit, to be hosted by the UK Government in London on 23-24 June, is a significant opportunity to demonstrate that it is serious about tackling IFFs. This could free up substantial resources to address child undernutrition more effectively.

what

illicit financial flows prevent countries from funding social programmes such as those tackling child undernutrition

who

the UK Government must play a leading role in ending IFFs at its illicit finance summit on 23-24 June

how

write to the Government asking them to ensure the summit frees up the resources needed to tackle child undernutrition

tackling IFFs to fund nutrition programmes

Good nutrition is a human right. Yet the world is way off-track when it comes to achieving global nutrition targets and Sustainable Development Goal 2 (‘zero hunger’) by 2030. Almost half of deaths among children under five years of age globally are linked to undernutrition. The prevalence of wasting (i.e. low weight-for-height) has barely changed in recent years, while stunting (i.e. low height-for-age) has increased. Yet real-life examples of highly cost-effective interventions boosting child nutrition do exist, and there is an urgent need to generate financial resources to scale up these sorts of nutrition programmes.

One way to achieve this is by tackling illicit financial flows (IFFs). IFFs represent a profound threat to human security across the planet, and result from illicit tax and commercial practices, illegal markets, corruption, and exploitation. New analysis by Results UK estimates that the 20 countries most affected by child undernutrition experienced at least US $309.8 billion in trade-related IFFs in 2024. If this trade were legitimate and that sum were taxed, it could provide significant funds to ensure good nutrition for every child.

how do IFFs deny resources for human development?

Our new analysis estimates that government revenue losses from trade-related IFFs amount to 86.3% of India’s and 65.1% of Nigeria’s domestically funded public health spending. The UN estimates that Africa loses more in illicit capital flight every year than it receives in Official Development Assistance. Moreover, African countries with high IFFs spend 25% less on health and 58% less on education compared with countries with low IFFs.

‘Trade misinvoicing’ is an illicit tax and commercial practice that generates trade-related IFFs. It enables money to be moved illicitly across borders, and involves the deliberate falsification of the value, volume, and / or type of commodity in an international commercial transaction, often under the cover of legal trade. Trade misinvoicing is used to evade customs duties and taxes, launder the proceeds of criminal activity, circumvent quotas and capital controls, and to claim tax incentives.

The proceeds of trade misinvoicing can be diverted to tax havens via secrecy jurisdictions. ‘Secrecy jurisdictions’ use legal structures to conceal identity while the term ‘tax haven’ emphasises the offer of zero or minimal tax. In total, wealth equivalent to around 10% of global GDP is hidden in tax havens.

Trade-related IFFs severely undermine domestic tax revenues in all countries, reducing the resources available for public investment. As Global South countries tend to collect relatively low levels of personal income tax, they are often more reliant on corporate taxation compared with Global North countries, so trade misinvoicing causes the former proportionately more harm. Those most harmed are the poorest (as they benefit the most from public services) and women and girls (as they disproportionately assume the burden of care when public services are underfunded).

the UK’s out-sized role in ending IFFs

As a significant trading nation, a major financial centre and a leading provider of corporate services, the UK has a crucial role to play in tackling trade-related IFFs.The Illicit Finance Summit, to be hosted by the UK Government in London on 23-24 June, must be judged on whether it furthers these ambitions.

what exactly should the UK do to help end IFFs?

The UK, British Overseas Territories and Crown Dependencies are responsible for over a quarter of all countries’ annual tax losses, and act as secrecy jurisdictions and tax havens due to their weak financial reporting rules. This makes the UK ultimately responsible for more tax losses than any other nation in the world. If these tax losses were not facilitated, it is estimated that 221,583 under-five deaths and 27,292 maternal deaths would be averted over a 10-year period. Comprehensive public registers of beneficial ownership, along with a global register that clearly identifies all assets and their beneficial owners, would shine a light on IFFs.

A new UN treaty on tax, along with a new UN coordination and oversight mechanism for IFFs, are also sorely needed. As a result of the injustices in the global tax system, African countries initiated the process for a UN Framework Convention on International Tax Cooperation in 2022, aiming to ensure genuine global cooperation and coordination against tax losses resulting from IFFs. Yet instead of advocating for a strong and extensive UN Framework Convention, the UK has attempted to block it from the very beginning. In November 2024, the UK was one of only nine states to vote against the UN General Assembly resolution approving the terms of reference for the treaty. The UK should reverse course.

The UK should also support a new UN global coordination and oversight mechanism for IFFs. A UN tax treaty and a UN mechanism on illicit finance would bring the existing institutions engaged with international tax and IFFs under unified control rooted in international law. Current actors, including the Organisation for Economic Co-operation and Development (OECD) and the Financial ActionTask Force (FATF) are inequitable and ineffective, and fail to criticise powerful countries such as the UK.

take action!

Please write to the responsible UK Government Ministers, asking them to:

Force the British Overseas Territories and Crown Dependencies to publish comprehensive public registers of beneficial ownership, and advocate for a public global register that identifies all assets along with their beneficial owners in an open data format.
Support a UN Framework Convention on International Tax Cooperation along with a UN coordination and oversight mechanism on IFFs.

Responsible Ministers:

Stephen Doughty MP, Minister of State (Europe, North America and Overseas Territories). Email address – [email protected]
Dan Jarvis MBE MP, Minister of State, Minister of State (Home and Cabinet Offices) Email address – [email protected]
Dan Tomlinson MP, Exchequer Secretary to the Treasury. Email address – [email protected]

You may wish to copy your letter to your constituency MP to increase its political impact (make sure to include your full postal address).

Want tips on how to write a good letter? Use this guide.

Thank you for taking action!

take action!

write to the Government about ending illicit financial flows using the information on this web page

share with them our new Trading Hunger report to show why ending IFFs matters in the global fight against undernutrition

I took action!

we’re here to support you!

If you have any questions or need support or advice in writing your letter, please contact Naveed Chaudhri, Director of Campaigns, at [email protected].

Nigeria: severe damage caused by trade misinvoicing

Nigeria has the world’s second-highest burden of stunted children, yet Government expenditure on health is only US $30 per capita. Trade misinvoicing has a profound impact on Nigeria’s economy, causing substantial annual revenue losses to the Nigerian Government, which could have been used to address child stunting and wasting, and to realise children’s right to health more broadly. Trade misinvoicing also fuels corruption, bolsters organised crime, weakens confidence in institutions, and is unfair for businesses that do not engage in misinvoicing.

While the Nigerian government has taken some important steps to tackle trade misinvoicing, it faces significant challenges. For example, a new unified customs management system was launched in October 2024, aiming to improve transparency, compliance and efficiency, and to boost revenue growth. The Nigerian government has received praise for its efforts, but any assertion that the Nigerian Government has been adequately supported to carry out reforms is highly dubious.

Read more in our report, Trading Hunger.

Apapa Port Complex in Lagos, Nigeria.
Credit: dotun55