Bangladesh lost an estimated $410 million in tax revenue in 2022 because of illicit capital outflows, according to data examined by the UK-based Tax Justice Network (TJN). The same year the country’s total illicit financial outflows climbed to a seven-year high of $1.33 billion. The tax loss figure is calculated separately from the outflow totals, meaning the two numbers reflect different aspects of the problem.
Illicit Outflows Surge Since 2016
From 2016 through 2022, Bangladesh recorded roughly $4.21 billion in estimated illicit financial outflows. This amount represents a more than sixfold rise from the $115 million reported in 2016 to the seven-year peak mentioned above. The outflows grew steadily through the early years, reaching $197 million in 2017, $584 million in 2018, and $605 million in 2019 before declining to $327 million in 2020 during the pandemic. The trend reversed sharply in 2021 and 2022, with outflows surging to $1.05 billion and then $1.33 billion respectively. The 2022 outflow was 27% higher than the previous year and more than four times the $327 million level observed in 2020, when the pandemic disrupted global trade.
The tax loss is derived by applying Bangladesh’s corporate income-tax rate to the corporate component of illicit financial flows and its personal-income-tax rate to offshore wealth. That approach differs from the method used by Global Financial Integrity (GFI), which concentrates on trade-related misinvoicing. GFI estimates that Bangladesh lost $68.3 billion through trade-related illicit flows between 2013 and 2022, averaging about $6.8 billion each year.
Jurisdictions as Transit Hubs
Top destinations for the outflows included the British Virgin Islands, Cayman Islands, Hong Kong, Singapore, Switzerland, the Netherlands, Ireland and Luxembourg. These jurisdictions are widely recognised for their financial secrecy and favourable tax regimes. Hong Kong featured in the top-10 list every year from 2016 to 2022, while the Cayman Islands and the British Virgin Islands repeatedly appeared among the top three. The Cayman Islands ranked first in 2016, 2017 and 2021, whereas Hong Kong topped the list in 2018, 2019 and 2020.
Methodology and Caveats
TJN’s methodology estimates profits shifted by multinational companies to low-tax jurisdictions and tracks unreported offshore wealth. The analysis looks at gaps between reported and expected profits based on economic activity, as well as large cross-border deposits and investments. The network stresses that these figures are statistical estimates and may change if the underlying assumptions are altered.
Although the 2022 data highlight a sizable tax loss, the limitations of the method call for caution when interpreting the absolute numbers. The shift in destination jurisdictions—such as the appearance of Mauritius, Denmark and Chile in the top-10 during 2022—suggests that routes for illicit flows are evolving. This pattern points to a growing reliance on hybrid financial intermediaries that blend traditional offshore centres with mainstream corporate hubs. Portugal appeared in 2018, while Spain featured in 2016-17, showing how routes for illicit outflows adapt to changing regulatory environments and economic opportunities.
When the broader scope of corporate- and wealth-related flows used by the network is compared with GFI’s trade-focused approach, the two estimates diverge sharply. Both analyses, however, underline systemic challenges in tracking and addressing illicit financial activity across borders. The changing composition of top-10 destinations, from traditional offshore centres like the Cayman Islands and British Virgin Islands to mainstream financial hubs such as Hong Kong, Singapore, and the Netherlands, reflects an increasing trend toward using multiple jurisdictions as intermediaries, complicating efforts to trace illicit capital movements to their ultimate destinations.
