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PRESENTATION ON SHADOW ECONOMY

AND DIGITALIZATION

CROSS BORDER SHADOW ECONOMIES AND

DIGITALIZATION

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LARGE TAXPAYER DEPARTMENT

PRESENTED BY: H. KABYEMELA

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Table of contents:-

Various means of hiding income

generated from the shadow economy

Cross border data exchange

The role and effectiveness of international

Cooperation through information exchange

(EOIR, CRS)

suggested strategies to curb cross-border

shadow economy

The impact of digitalization on the shadow

economy

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A:Various means of hiding

income generated from the

shadow economy Offshore bank accounts

Cash stacks and cash transactions

Cross border cash movements

The use of digital currencies (virtual

and Crypto currencies)

Money laundering activities

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B: Cross border data exchangeIn order to achieve responsible cross border

data exchanges, the following can be done

Countries must design bilateral and

multilateral legal instruments so as to provide

the legal basis for cross border data

exchanges and to define the scope of the

exchange

Both automatic, upon request, and

spontaneous exchanges would be needed

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B:Cross border data exchange Cont…

Data exchange function would need to be clearly

reflected in Organizational Structures of tax

administrations

Resources (human, financial and material) must

be allocated to ensure effective functioning of

the data exchange

Monitoring and evaluation mechanism must be

put in place to assess implementation

effectiveness

Political will is of importance for establishment of

enabling environment to support responsible

cross data exchanges

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C:The role and effectiveness of

international Cooperation through

information exchange (EOIR, CRS)

and Cooperation

EOIR

CRS

Cooperation through Audits and

Investigations

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D: Suggested strategies to curb cross-

border shadow economy Encourage innovations targeting to reduce cash

transactions in the economy, without correspondingincrease in transactional costs, particularly indeveloping countries

Enhancement of the international cooperation tofoster effective Exchange of Information throughutilization of all EOI mechanism (CRS, EOIR andSpontaneous)

Effective implementation of Cash Declarationrequirements at all arrivals or departures points.

All Governments around the globe must find ways toensure effective regulation of digital currency (virtualand crypto currency) transactions

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E:The impact of digitalization on the shadow economy

i. Interactions between digitalization and the shadow

economy;

ii. Digital footprints may help to Uncover the shadow

economy;

iii. Data analytics and new technologies could help in

containing informal activities;

iv. Digital payments and digital banking can facilitate

integration of the shadow economy into the formal

economy;

v. Extensive use of social media and digital technologies may

facilitate the growth of shadow economy;

vi. Digitalized methods of doing business enhance cross

border shadow economies as compared to traditional

method;

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“Black money is so much a part of our

white economy, a tumour in the centre

of the brain - try to remove it and you

kill the patient.”

― Rohinton Mistry, Family Matters

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Kilimanjaro Mountain(Tallest in Africa)

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Great Wildebeest Migration at

Serengeti National Park

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Ngorongoro Crater

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