OCCRP: Sprawling shadow economy in Tajikistan

The OCCRP news item “Officials Examine Sprawling Shadow Economy in Tajikistan”, dated 2 August 2019, summarises statements by Tajik officials and findings on the scale of the country’s shadow economy. The report states that the chairman of Tajikistan’s State Investment Committee, Farrukh Hamralizadeh, told a press conference in Dushanbe that the shadow economy accounts for up to 20% of the country’s total economy and is depriving the treasury of tax revenue, with much of it blamed on illegal activities by businesses (“Entrepreneurs conduct part of their activities legitimately, and the rest are illegal”). According to the report, these estimates match those of the International Finance Corporation (IFC), whose earlier study of Tajik businesses found that on average entrepreneurs hid 20% of their annual income, that 78% of surveyed entrepreneurs paid workers more than they reported to the government, and that some 30% of business owners bribed tax authorities. The report states that IFC researchers attributed tax evasion to the heavy tax burden and struggling economy, and that more than 13,000 entrepreneurs had left the country so far in 2019 in search of more profitable markets, out of nearly 325,000 businessmen operating domestically. The report states that more than US$26 million went unaccounted for in 10 Tajik ministries and departments audited since the beginning of the year, with the Ministry of Education recording 85 corruption violations in six months and the Health Ministry recording 83, where auditors found that more than 500 people — every one in five health officials — had violated corruption rules, mostly nepotism. According to State Financial Control and Corruption Agency Director Sulaymon Sultonzoda, 1,370 cases of corruption and tax evasion were investigated over six months, 400 of them egregious. Sources cited: OCCRP, State Investment Committee, State Financial Control and Corruption Agency, Prosecutor General’s Office, IFC study.