Tax evasion is the deliberate use of a variety of financial and fiscal devices of doubtful legality, including the deliberate concealment of relevant information, in order to avoid payment of tax. Of special concern is the technique of implying in each country through which funds move that they are being taxed in some other country. This takes advantage of the relatively poor exchange of information between national tax administrations, particularly in developing countries. Tax evasion may also be closely associated with illegal business transactions; it may be the result of collusion between taxpayers in different countries, and of claims for tax deductions in developed countries by taxpayers with business in developing countries.
In the USA it is estimated that for every $5 of federal taxes, $1 is being evaded, mostly by single proprietors and small businesses. The annual tax gap is expected to exceed $100 billion in 1990. In the UK in 1993 it was estimated that £10 billion could be raised by the government over a two year period simply by closing tax loopholes. In 1994 it was estimated that tax evasion cost 20 European treasuries US$150 billion, namely US$400 million per day.