The little-understood practice of trade mis-invoicing or over-invoicing has cost Tanzania’s economy $2.48 billion in a decade. The concept of trade mis-invoicing or over-invoicing is where companies and their agents deliberately alter the prices of their exports and imports in order to justify moving money out of, or into, a country illicitly. The practice is slowly, but surely becoming common in Tanzania.
For instance, mining corporations to avoid paying income taxes inflate fuel import costs and shift taxable income out of Tanzania into tax havens abroad have allegedly used it. The amount Tanzania loses annually to trade misinvoicing or over invoicing is astounding. An international taxation researcher Ms Rhiannon McCluskey, estimates that on average $248 million worth of capital has been extracted out of Tanzania per year using this process over the past decade.