illicit financial flowS and micro data
who is the largest investor in germany?
who is the largest investor in brazil?
who is the largest investor in south africa?
why?
Spoiler: Tax avoidance
professionals
corporate entities
state
PARt 1: The corporations
corporate ownership is complex
Garcia-Bernardo, J., Fichtner, J., Takes, F. W., & Heemskerk, E. M. (2017). Uncovering offshore financial centers: Conduits and sinks in the global corporate ownership network. Scientific Reports, 7(1), 1-10.
Work with Valeria Secchini (PhD candidate at COPTAX, Charles University)
modeling corporate structures with higher-order dependencies
Work with Valeria Secchini (PhD candidate at COPTAX, Charles University)
modeling corporate structures with higher-order dependencies
Xu, Jian, Thanuka L. Wickramarathne, and Nitesh V. Chawla. "Representing higher-order dependencies in networks." Science advances 2.5 (2016): e1600028.
Kullback-Leibler divergence
Problem: overfitting
(high number of false positives)
On realistic synthetic data:
Precision: 10%
Sensitivity: 80%
Our solution: Train/Validation approach
Find in the training, keep if it holds in validation
Jensen–Shannon divergence
Depends on frequency of each higher-order dependency, and the variability in train/test
On realistic synthetic data:
Precision: 70%
Sensitivity: 50%
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Open questions:
How to derive the thresholds (δ) theoretically?
How to handle heterogeneity? Higher-order dependencies may be "owner dependent" (the first node in the chain)
How to handle time series? (e.g. detect changes in structures, measure effect of policy)
(lots on results: community, ranking, simulation)
Results:
Applied to multinational corporations
70 patterns, 75% containing a tax haven
p.
p.
p.
PARt 2: the professionals
- Corporate structures are created by tax professionals:
- Set up the entity
- Provide directors
- Manage the accounts
- In the Netherlands: Trust Industry (trustkantoren)
- 94% of the services are provided to foreign companies
- 250,592 entities in 100 addresses
- Providing trust services requires a license
- But it is expensive + compliance
8150 companies
9.3/window
facilitators are key
How many illegal trust service providers are in the netherlands?
detect them based on their network
Garcia-Bernardo, Javier, Joost Witteman, and Marilou Vlaanderen. "Uncovering the size of the illegal corporate service provider industry in the Netherlands: a network approach." EPJ Data Science 11.1 (2022): 23.
Strategy:
- Build network features
- Find similar directors to those from a licensed trust
- Manually annotate a sample
- Robustness test
Open questions:
Better way to find illegal directors? (maybe GNNs)
Motifs mining: What are some motifs linked to providing trust services
(lots on applications: e.g., suspicious transactions)
Results:
Illegal trust service providers:
- 31-51% of total number of trust service providers
- 19-27% of all companies managed
PARt 3: The state
what type of country lose the most from tax avoidance?
Garcia-Bernardo, Javier, and Petr Janský. "Profit shifting of multinational corporations worldwide." arXiv preprint arXiv:2201.08444 (2022).
Cost = (Profits shifted out - Profits shifted in) * Tax rate / GDP
Garcia-Bernardo, J., Haberly, D., Janský, P., Palanský, M., & Secchini, V. (2022). The indirect costs of corporate tax avoidance exacerbate cross-country inequality (No. 2022/33). WIDER Working Paper.
Garcia-Bernardo, J., Haberly, D., Janský, P., Palanský, M., & Secchini, V. (2022). The indirect costs of corporate tax avoidance exacerbate cross-country inequality (No. 2022/33). WIDER Working Paper.
Garcia-Bernardo, J., Haberly, D., Janský, P., Palanský, M., & Secchini, V. (2022). The indirect costs of corporate tax avoidance exacerbate cross-country inequality (No. 2022/33). WIDER Working Paper.
Garcia-Bernardo, J., Haberly, D., Janský, P., Palanský, M., & Secchini, V. (2022). The indirect costs of corporate tax avoidance exacerbate cross-country inequality (No. 2022/33). WIDER Working Paper.
Garcia-Bernardo, J., Haberly, D., Janský, P., Palanský, M., & Secchini, V. (2022). The indirect costs of corporate tax avoidance exacerbate cross-country inequality (No. 2022/33). WIDER Working Paper.
developing countries lose more
Open questions:
How to implement policy interventions in the model?
How to calibrate the model to find time trends?
summary
- Wealth inequality is rising
- Tax avoidance is key
- Complex corporate structures are used for it
- Network science tools help us:
- Understand how they organize (higher order dependencies)
- Estimate which countries gain/lose
- Detect facilitators
Image: R-package signet
Covid spread on family & school networks
with RIVM, ministry of health, Christine Hedde-von Westernhagen
Experiments on information spread in networks
with: Zohar Neu, Mathew Hardy, Tom Griffiths, Aleksandra AloriĆ,
P.M. Krafft, Andrea Santoro, Allison Morgan
Detecting organized groups in social networks Polarization in signed networks with: Sofia Chelmi, Elena Candellone, Erik-Jan van Kesteren, Shazia Babul
summary
- Wealth inequality is rising
- Tax avoidance is key
- Complex corporate structures are used for it
- Network science tools help us:
- Understand how they organize (higher order dependencies)
- Estimate which countries gain/lose
- Detect facilitators
Javier García-Bernardo
javier@duck.com
NetSci
By Javier GB
NetSci
Presentation for the dutch network science society
