Illicit financial flows, tax and human rights

This background paper has been drafted to inform discussion by experts, State delegates and other relevant stakeholders in New York and New Haven on 29 to 30 October 2015. Both meetings are intended to inform the final study of the Independent Expert on foreign debt and human rights, Juan Pablo Bohoslavsky, on illicit financial flows, human rights and the post-2015 development agenda of the United Nations, to be submitted to the Human Rights Council in March 2016. The paper should be read in conjunction with the Interim Report of the Independent Expert (A/HRC/28/60) from March 2015.

The background paper expands on the problem of tax abuse introduced in the Interim Report, and discusses in greater detail the practices of tax evasion through the offshoring of private wealth by wealthy individuals and through trade misinvoicing, as well as tax avoidance by multinational corporations. Together these are estimated to account for the majority of all illicit financial flows, and as such have a detrimental impact on States’ abilities to realize human rights, especially social, economic and cultural rights, but also political rights and the right to equality and non-discrimination. The background paper also discusses how these practices may violate international human rights obligations.

Combatting illicit financial flows has been incorporated into the United Nation’s Sustainable Development Goals, adopted during the United Nations Sustainable Development Summit of September 25-27, 2015. The background paper concludes with a discussion of policy proposals for ensuring that the relevant targets will be met. Questions to inform further discussion are attached in an annex.