EXECUTIVE SUMMARY
Tax evasion and tax fraud through the abuse of charities is a serious and increasing risk in many countries although its impact is variable. Some countries estimate that the abuse of charities costs their treasury many hundreds of millions of dollars and is becoming more prevalent.
This report was prepared by the Tax Crimes and Money Laundering Sub-Group of Working Party No. 8. It contains information on tax crime and money laundering through the abuse of charities. The information contained in the report was provided by 19 countries in response to a questionnaire issued in May 2008.
The report summarizes the status attached to charities in the countries surveyed and compiles the common methods of the abuse of charities, the sectors at risk and the few attempts so far to quantify those risks. It sets out the detection strategies that countries have adopted. It also provides a listing of red flag indicators that countries can use in training front-end staff that process or assess tax returns as well as tax auditors and tax investigators in pursuing their verification and enforcement duties. The report gives examples of information resources and describes the detection and investigation approaches adopted by a number of the countries.
The abuse of charities is becoming more organised and more sophisticated. Most countries surveyed that have identified problems with the abuse of charities find it difficult to detect all cases of abuse. The report gives illustrative case studies to aid comprehension and to raise the awareness of tax authorities about the potential abuse of charities in their countries. The report identifies a set of good practices that tax authorities vulnerable to the risk of this abuse might consider.
Detailed report link: here