Iran-backed Houthis seize over half a billion dollars of lost taxes

An official document has revealed that the annual tax revenue lost due to activities of the "shadow economy" and associated financial crimes in areas under Houthi control is estimated to be between $448 and 509 million, which represents 26% to 58% of the overall state budget deficit.

The Iran-backed Houthis seize enormous revenues obtained from illegally imposing taxes and customs on imported goods at the ports of Hodeidah and the customs outlets they have established between provinces and regions to finance their military operations, enrich militia leaders, and establish their own investment projects.

A joint report issued by the Financial Information Unit and the Institute of Banking Studies revealed that the estimated amount of lost tax revenue was $502 million in 2018, $509 million in 2019, $470 million in 2020, $448 million in 2021, and $547 million in 2022.

These amounts represent 2.3% of the annual gross domestic product.

Financial crimes in Houthi-controlled areas are linked to corruption associated with revenues from oil derivatives trade, foreign aid, military and security spending, commercial household spending, and their relationship with the government, the banking system, state lands and properties, taxes, customs, Zakat, endowments, salaries, wages, supervisory and regulatory government positions, and public production institutions.

The "Central Agency for Control and Accounting" run by the Houthis acknowledged in a performance evaluation report of the Tax Authority for the period from 2018 to June 2020, the existence of a significant gap between the results of tax audits at the executive and supervisory levels.

"The authority does not monitor the transactions and true information about the activities of taxpayers, which has led to a large segment of taxpayers and tax vessels remaining outside the control of the tax authority, expanding the phenomenon of tax evasion and violating the principle of tax fairness". The report said.