CC BY
0SUSTAINABLE DEVELOPMENT AND ENGINEERING ECONOMICS 1, 2024
Research article
DOI: https://doi.org/10.48554/SDEE.2024.1.5
Capital Flight as a Threat to the Country’s Economic Security
Angelina Tatevosyan* , Alexandra Garmysheva , Timur Akhmedov
St. Petersburg University of the Ministry of Internal Affairs of Russia, Saint Petersburg, Russia,
angelinaang1@mail.ru, garmysheva.a@yandex.ru, ttt_tima@mail.ru
*
Corresponding author: angelinaang1@mail.ru
Abstract
T
he purpose of this study is to consider the phenomenon of ‘capital flight’ as a threat to the economic
security of the country. This goal is achieved using general scientific methods, including analysis
and synthesis, induction and deduction, abstraction, systematisation, and comparison. The study
highlights the differences between the concepts of ‘capital outflow’ and ‘capital flight’, assesses the scale
of capital flight and outflow, analyses the causes of these phenomena, and explicates the goals of capital
flight. One of the causes of capital flight, namely tax evasion, is specified. The findings underscore the
main directions of the impact of capital flight on the economic security of the country, and key measures
to combat capital flight are proposed.
Keywords: capital flight, capital outflow, threat, economic security
Citation: Tatevosyan, A., Garmysheva, A., Akhmedov, T., 2024. Capital Flight as a Threat to the Country’s Economic
Security. Sustainable Development and Engineering Economics 1, 5. https://doi.org/10.48554/SDEE.2024.1.5
This work is licensed under a CC BY-NC 4.0
© Tatevosyan, A., Garmysheva, A., Akhmedov, T., 2024. Published by Peter the Great St. Petersburg Polytechnic
University
71 Management of knowledge and innovation for sustainable development
SUSTAINABLE DEVELOPMENT AND ENGINEERING ECONOMICS 1, 2024
Научная статья
УДК 338.2
DOI: https://doi.org/10.48554/SDEE.2024.1.5
Бегство Капитала как Угроза Экономической Безопасности Страны
Ангелина Татевосян* , Александра Гармышева , Тимур Ахмедов
Санкт-Петербургский университет МВД России, Санкт-Петербург, Россия, angelinaang1@mail.ru,
garmysheva.a@yandex.ru, ttt_tima@mail.ru
*
Автор, ответственный за переписку: angelinaang1@mail.ru
Аннотация
Ц
ель исследования заключается в рассмотрении явления «бегство капитала» в качестве
угрозы экономической безопасности страны. Для достижения поставленной цели были
применены общенаучные методы познания, такие как: анализ и синтез, индукция
и дедукция, абстрагирование, систематизация, а также сравнительный метод. Основными
результатами исследования являются обоснование различий понятия «отток капитала» и
«бегство капитала», оценка масштабов бегства и оттока капитала, анализ причин возникновения
этих явлений, анализ целей возникновения бегства капитала, подробно раскрыта одна из
причин возникновения бегства капитала – уклонение от уплаты налогов, обоснованы основные
направления влияния бегства капитала на экономическую безопасность страны, предложены
основные меры по борьбе с бегством капитала.
Ключевые слова: бегство капитала, отток капитала, угроза, экономическая безопасность.
Цитирование: Татевосян, А., Гармышева, А., Ахмедов, Т., 2024. Бегство Капитала как Угро-
за Экономической Безопасности Страны. Sustainable Development and Engineering Economics 1, 5.
https://doi.org/10.48554/SDEE.2024.1.5
Эта работа распространяется под лицензией CC BY-NC 4.0
© Татевосян, А., Гармышева, А., Ахмедов, Т., 2024. Издатель: Санкт-Петербургский политехнический
университет Петра Великого
Управление знаниями и инновациями в интересах устойчивого развития 72
Capital flight as a threat to the country’s economic security
1. Introduction
Capital flight is a phenomenon that draws increasing attention from the academic community as
well as political and economic figures. This process is characterised by the transfer of financial resourc-
es and assets from one country to another, which is becoming an integral part of the modern global
economy. Capital flight can occur for a variety of reasons, but its consequences can be devastating for
a country’s economic security.
In this paper, we analyse capital flight as a phenomenon and outline its causes and consequences
for the economy and financial stability of the country. Modern methods and strategies for combating this
threat, aimed at strengthening the economic security of the state, are also presented. This study provides
a complete overview of capital flight and its importance to Russia’s current economic policy and secu-
rity.
Many economists and researchers have carefully studied and considered capital flight as a threat
to a country’s economic security. Joseph Stiglitz, Darnell Girhardt, Raghuran Rajan, and Maurice Obst-
feld are among the most prominent economists and researchers whose works are relevant to this topic.
Some economists equate the concepts of ‘capital outflow’ and ‘capital flight’ (Nersisyan, 2020), and
others consider just one of these two phenomena. For example, researchers posited that ‘capital flight is
essentially a massive outflow of private capital due to the growing economic and political instability of
the national economy’ (Nevmovenko, Shmyreva, 2012). Another study defined the outflow of capital as
‘the flow of funds beyond the economic borders of the state, where funds are poured into the turnover of
foreign economies, and the state’s money is invested in foreign assets’ (Smirnov, Gamulinskaya, 2023).
Thus, it is necessary to consider the essence of these two phenomena to distinguish between them.
2. Methods and materials
The research methodology is based on general scientific methods, such as analysis and synthesis,
induction and deduction, abstraction, and systematisation, as well as comparison. The study used statis-
tical data and materials from the Organisation for Economic Cooperation and Development, the Ministry
of Finance of Russia, the Federal Tax Service of Russia, the Prosecutor General’s Office of Russia, and
the Bank of Russia.
It is a challenge to assess the capital flight phenomenon because it is a part of the shadow business.
However, to understand the scale of shadow activities in a particular country, we can refer to the data
from the ‘Shadow Economies Around the World: What Did We Learn Over the Last 20 Years?’ study
conducted by the International Monetary Fund, which analysed the scale of the shadow economy in 158
countries for the 1991–2015 period.1 Regarding the outflow of capital, this study used official data on the
import and export of capital from Russia, which have been named financial transactions of the private
sector by the Central Bank.
3. Results
Issues of the country’s economic security are becoming relevant in a world where the free move-
ment of capital has become an integral part of the world’s modern economy. The net import/export of
capital is one indicator of a country’s economic security. This phenomenon is often confused with capital
flight. In this regard, it is necessary to differentiate capital outflow and capital flight. An analysis of the
scientific literature reveals that the concepts of capital outflow and capital flight are not identical. Here,
capital outflow implies the balance of private sector financial transactions without suspicious transac-
tions2, whereas capital flight encompasses these suspicious operations. Capital flight is the process by
which financial assets and capital are moved out of the country, bypassing the tax system and restrictions
imposed by the government. Capital flight can take a variety of forms, such as withdrawing funds to
foreign accounts, investing in foreign assets, buying real estate abroad, and other operations aimed at
avoiding domestic economic risks.
1
Nabiullina explained what the capital outflow from Russia means.” Internet resource. URL: https://ria.ru/20181010/1530390761.html. Accessed October 5, 2023.
2
73 Sustain. Dev. Eng. Econ. 2024, 1, 5. https://doi.org/10.48554/SDEE.2024.1.5
Tatevosyan, A., Garmysheva, A., Akhmedov, T.
Having understood the difference between capital outflow and capital flight, it is necessary to as-
sess the scale of these phenomena. Below are the official data on the net inflow/outflow of capital from
the country. For clarity, the statistics are presented in the form of a graph (Fig. 1).
Figure 1. Net inflow/outflow of capital in Russia
Source: compiled by the author based on data from the Bank of Russia
As shown in Figure 1, the largest capital outflow was observed during 2006–2007, and the largest
inflow was observed in 2014. It should also be noted that the import of capital exceeded its export from
2008 to 2021. Next, we turn to the data on Russia’s shadow economy to assess the scale of capital flight.
Table 1. Data on the shadow economy in Russia for 2012–2018 (Tatevosyan, 2021)
Year 2012 2013 2014 2015 2016 2017 2018
Size of the shadow economy, trillion rubles 9.36 11.01 12.35 23.4 24.3 18.9 20.7
Share of the GDP, % 15.00 16.51 17.30 28.16 28.26 20.54 19.98
Source: compiled by the author based on data from the Federal State Statistics Service and the Federal
Financial Monitoring Service
For example, the share of the shadow economy amounted to about 20% of the GDP in 2018
(Fig. 2).
Figure 2. Share of the shadow economy in GDP
Sustain. Dev. Eng. Econ. 2024, 1, 5. https://doi.org/10.48554/SDEE.2024.1.5 74
Capital flight as a threat to the country’s economic security
Additionally, in 2018, the International Monetary Fund published a study entitled ‘Shadow Econo-
mies Around the World: What Did We Learn Over the Last 20 Years?’ This study analysed 158 countries
for the availability and level of the shadow economy between 1991 and 2015 and showed that the aver-
age level of the shadow economy in Russia for this period was 38.42%. For comparison, this figure was
8.34% for the United States and 60.64% for Zimbabwe.
The reasons for capital outflow and capital flight are quite similar:
1. Economic crises. They are expressed as temporary and long-term economic difficulties, for ex-
ample, inflation, budget deficits, and currency collapses.
2. Political instability, which is expressed by crises, elections, revolutions, and changes in the gov-
ernment. Instability can create uncertainty and risk for businesses and investments.
3. Corruption and bureaucracy can also cause capital flight, as they exacerbate risks and create
obstacles for businesses.
4. Abrupt changes in tax legislation (for example, an increase in tax rates) can significantly worsen
business conditions and cause capital outflow abroad.
5. Unstable situations on the global stage and countries involved in conflicts are the reason for the
outflow of capital from them, as they are insecure.
The issue of capital flight has two sides. The first is the outflow of foreign capital, which reduc-
es the attractiveness of domestic enterprises to foreign investment. The second is the outflow of Rus-
sian capital abroad, which leads to an increase in the foreign assets of Russian residents (Vinnikova,
Kuznetsova, Bindyukova, 2019). The total amount of foreign assets of the Russian Federation decreased
by USD 42.2 billion and amounted to USD 1551.7 billion as of July 01, 2023 (Table 2).
Table 2. Foreign assets of the Russian Federation, US$ million
Balance as of January 1, 2023 Balance as of July 1, 2023
Total 1,593,908 1,551,736
Direct investments 381,194 337,589
Portfolio investment 80,641 74,773
Derivatives 1,282 1,033
Other investments 548,801 555,924
Reserve assets 581,989 582,418
Source: compiled by the author based on data from the Bank of Russia
Fig. 3 highlights the main goals of capital flight.
Figure 3. Main objectives in exporting capital
75 Sustain. Dev. Eng. Econ. 2024, 1, 5. https://doi.org/10.48554/SDEE.2024.1.5
Tatevosyan, A., Garmysheva, A., Akhmedov, T.
There are various ways through which capital flight occurs, namely offshore accounts and compa-
nies, investments in real estate, funds and shares, tax havens, and business relocation. When the export
of capital is carried out legally, fulfilling all obligations and requirements for paying relevant taxes and
declarations, this is not recognised as capital flight. However, in practice, illegal capital flight schemes
are carried out to pursue the goal of tax evasion and money laundering. Tax residents seek to reduce
their tax burden, since moving funds to countries with lower tax payments allows them to save on taxes
and increase profits. Capital flight can also be carried out due to the desire to protect one’s assets from
possible confiscation, seizure, and prosecution, especially in periods of unstable political and economic
global situations.
The use of various methods of capital flight reflects the selfish motives of taxpayers for personal
enrichment through hiding assets and tax evasion, thereby expressing their disagreement with the coun-
try’s tax system. Their decisions are also influenced by the attractiveness of foreign investment. Some
countries provide preferential conditions for foreign investors to attract capital and locate businesses
under confidential and more favourable tax conditions. Tax evasion is today’s global challenge that has a
significant impact on the economy and social development of many countries. There are a large number
of academic works that consider various reasons for the emergence and spread of this negative phenome-
non. In this paper, however, we turn our attention to tax evasion as a key cause of another global process,
namely capital flight.
Tax payments are one of the main sources of government revenue. The largest part of the structure
of federal budget revenues belongs to the mineral extraction tax (39%) and the import value added tax
(23.3%) (Fig. 4). In total, the budget system of the Russian Federation received 42 trillion rubles in Jan-
uary–December 2022, and the growth rate amounted to 14.68% (Fig. 5).
Figure 4. Structure of federal budget revenues for 2022
Source: Ministry of Finance of the Russian Federation
Sustain. Dev. Eng. Econ. 2024, 1, 5. https://doi.org/10.48554/SDEE.2024.1.5 76
Capital flight as a threat to the country’s economic security
Figure 5. Revenues to the budget system of the Russian Federation in January–December 2022
Source: compiled by the author based on data from the Analytical Portal of the Federal Tax Service of
Russia
However, tax payments constitute not only an important part of the state budget but also an es-
sential part of the profits and incomes of the population and organisations. Economic entities strive to
reduce costs, explaining this as a reason for personal enrichment and an opportunity to direct the freed-
up financial resources to business development. When opportunities arise for offshore companies and
tax havens, taxpayers may take risks to obtain greater profits and choose to hide assets and move capital
abroad. In addition, problems such as high tax rates, unfair distribution of the tax burden, opacity and
instability of the tax system, and corruption can encourage economic entities to search for ways to re-
duce tax liabilities.
There are legal ways to optimise taxation. The government provides various tax incentives and
special tax regimes. Therefore, the use of illegal methods to reduce tax payments, that is, tax evasion,
violates the principle of fair competition and does not justify taxpayers’ desire to improve their position
in the market. Capital flight undermines taxpayers’ confidence in the tax system and reduces government
revenues, which leads to increased social inequality and limits the country’s development.
Transnational corporations have a particular impact on the problem of capital flight. Such corpo-
rations have the freedom to choose tax rules and laws to avoid paying taxes in the countries where they
make profits, since they conduct their economic activities in different countries and even on different
continents. In particular, some corporations use the method of ‘transfer pricing’, ‘profit shifting’, or ‘thin
capitalisation’ (Tserenova, 2017). Tax havens serve as permanent legal addresses for more than 2 million
companies and thousands of banks. Some analysts estimate the wealth in these tax havens to be around
US$20 trillion3.
Some governments have introduced ‘thin capitalisation’ rules to ensure that transnational corpo-
rations involved in the exploitation of their country’s resources pay a fair amount of tax payments and
cannot manipulate their capital structure for tax purposes. These rules are designed to counteract the
cross-border movement of profits through excessive debt levels and therefore aim to protect the coun-
try’s tax base. This rule was first introduced in Canada in 1972 and is currently in effect in about 60
countries3. In Russia, thin capitalisation rules are applied in cases where the amount of controlled debt
on a debt obligation is more than 3 times higher than the equity capital of a Russian organisation4.
Risk of capital flight. URL: https://webeconomy.ru/index.php?page=cat&cat=mcat&mcat=137&type=news&p=5&newsid=1936. Accessed October 8, 2023.
3
Controlled debt. General ledger. URL: https://glavkniga.ru/situations/k501434. Accessed October 8, 2023.
4
77 Sustain. Dev. Eng. Econ. 2024, 1, 5. https://doi.org/10.48554/SDEE.2024.1.5
Tatevosyan, A., Garmysheva, A., Akhmedov, T.
The erosion of the tax base and profit outflow into tax havens have become global problems, the
solution of which requires global cooperation. The Organisation for Economic Co-operation and De-
velopment created the BEPS project to combat artificial income outflow from high-tax countries where
economic activity takes place in low- or no-tax countries without such economic activity. A total of 15
measures were adopted within the project at the G20 summit, the implementation of which should allow
countries to combat this phenomenon (Shelepov, 2016).
The Russian Federation has supported these measures. Russia signed an international agreement
on the automatic exchange of country-by-country reports to improve information transparency5, and
started exchanging information with the CIS countries in electronic format. Further, some laws on deoff-
shorisation were adopted, and three stages of capital amnesty were implemented, calling for the return
of residents’ capital to Russian jurisdiction. Amendments were made in relation to controlled foreign
companies, which toughens liability for the non-fulfilment of tax obligations. Since mid-March, the le-
galisation of cash has become possible in Russia, while the state has pledged not to investigate the true
sources of these funds’ origin (Trigub, 2022).
Recently, the issue of paying taxes by global transnational media corporations has been discussed
(Markina, 2018). Particular attention is paid to the content and media sector. In addition, the emergence
of new technologies that allow withdrawal of financial assets also requires a response from govern-
ment agencies. The Russian Federation has already taken measures to regulate digital financial assets6.
Measures are being developed and proposed to counteract new ways of tax evasion with the illegal
withdrawal of assets abroad using such innovative technologies as cryptocurrency. Cryptographic trans-
actions attract criminals due to their anonymity, data confidentiality, and the high speed of transactions,
which makes it possible to slow down the process of finding suspects or even avoid prosecution by law
enforcement agencies. Actually, a three-phase model of tax evasion has gained popularity. This model
can also act as a means of committing crimes, such as legalisation of proceeds from crime (laundering),
corruption-related crimes, and assistance to terrorist activities (Garmysheva, 2023).
There are several ways to deposit funds in cryptocurrency (Guseva, 2018):
– OTC transactions carried out directly outside the market;
– direct money transfer to cryptocurrency bypassing the KYC identification procedure on the ex-
change through a more private cryptocurrency or providing false passport data;
– using multiple accounts and accruing the maximum allowed amount that does not require iden-
tification.
Cryptocurrencies are widely used for illegal activities, including tax evasion and capital flight
abroad. All these aspects require special measures to regulate cryptocurrencies and combat illegal activ-
ities related to their use. At present, there is a growing interest in ensuring economic security in the field
of taxes. Tax security is a key component of the national economic security system, along with financial,
investment, food, and energy security. It also serves as the basis for the functioning of all other spheres
of economic security. It is impossible to protect other sectors of the economy and ensure their normal
functioning without ensuring tax security. This includes such sectors as health, education, national de-
fence, and social policy. Consequently, preventing threats to economic security in the field of taxation is
a priority task to guarantee the sustainable development and prosperity of the state.
The Federal Tax Service is authorised to conduct a tax audit, the purpose of which is to control the
taxpayer’s compliance with the law. Tax control is an integral part of financial control, and it includes
certain tools to combat tax evasion. The main instruments of tax control are taxpayer registration with
tax authorities, desk tax audits, on-site tax audits, tax monitoring, and information complexes.
5
Decree of the Government of the Russian Federation of August 14, 2014 No. 805 (as amended on February 21, 2018) ‘On concluding agreements on the exchange of information on tax
matters’. ATP Consultant Plus. URL: https://www.consultant.ru/document/cons_doc_LAW_167364/c672066b3deec9fb6ea9847804821ef6d4e8e374/ Accessed October 8, 2023.
6
Federal Law No. 259-FZ of July 31, 2020. On digital financial assets, digital currency and on amendments to certain legislative acts of the Russian Federation. ATP Consultant
Plus. URL: https://www.consultant.ru/document/cons_doc_LAW_358753/ Accessed October 8, 2023.
Sustain. Dev. Eng. Econ. 2024, 1, 5. https://doi.org/10.48554/SDEE.2024.1.5 78
Capital flight as a threat to the country’s economic security
Registration of taxpayers allows monitoring of the databases of the Unified State Register of Indi-
vidual Entrepreneurs and the Unified State Register of Legal Entities, track setting up shell companies,
winding up of inactive organisations, etc. The problem of capital flight remains relevant, despite all the
measures taken by the government to improve taxation, tax administration, and control, or to develop a
comfortable environment for doing business in Russian jurisdiction. Tax evasion through capital flight is
a threat to the economic security of the country, as it leads to a significant loss of budget revenues, which
reduces the government’s ability to finance important programs, and leads to an increase in economic
crimes. Out of the crimes in the sphere of economic activity, tax evasion (including through capital
flight) causes the greatest damage to the state budget. For example, the amount of identified damage
from tax crimes amounted to 81.6 billion rubles in 20227.
It is also worth noting that with its lower-than-average fiscal burden (21.6% without mineral ex-
traction tax), according to the Organisation for Economic Cooperation and Development, Russia has
a significant share of the shadow economy (38.42% of GDP), which includes tax evasion.8 Effective
collaboration of the governmental bodies on the tax crime system yields results that are reflected in sta-
tistical data. Tax revenues to the federal budget of the Russian Federation increased by 22.35% in Janu-
ary–December 2022 compared to the same period of the previous year9. Existing anti-tax evasion tools
make a special contribution to the government’s efforts to combat tax evaders. There is a wide variety of
criteria for classifying anti-tax evasion tools (Garmysheva, 2022).
However, statistical data confirm the need to improve the existing tools for countering tax evasion
and capital flight and to introduce new ones to improve the mechanism for countering this negative phe-
nomenon in Russia. The dynamics of the number of registered tax crimes has a downward trend with
some fluctuations (Fig. 6), while the dynamics of capital outflow from the country is rapidly increasing
(Fig. 7). On the one hand, this may indicate a strong influence of external factors on capital flight from
Russia, apart from the desire to evade taxes. On the other hand, this indicates the need to improve tools
for detecting, disclosing, and countering tax evasion due to the accelerated development of innovative
technologies used to transfer assets abroad. The time lag in government decision-making to combat tax
crime has a significant impact as well.
Figure 6. Dynamics of registered tax crimes in 2013-2022
Source: Compiled by the author based on the data of the portal of legal statistics of the General Prose-
cutor’s Office of the Russian Federation
7
The amount of reimbursed damage for tax crimes in 2022 amounted to 50 billion rubles. URL: https://www.gazeta.ru/business/news/2023/05/15/20433158.shtml?updated. Ac-
cessed October 6, 2023.
8
Official website of the International Monetary Fund. URL:
https://www.imf.org/en/publications/wp/issues/2018/01/25/shadow-economies-around-the-world-what-did-we-learn-over-the-last-20-years-45583. Accessed October 5, 2023.
9
Analytical web portal of the Federal Tax Service of Russia. URL: https://analytic.nalog.gov.ru/. Accessed October 8, 2023.
79 Sustain. Dev. Eng. Econ. 2024, 1, 5. https://doi.org/10.48554/SDEE.2024.1.5
Tatevosyan, A., Garmysheva, A., Akhmedov, T.
Figure 7. Dynamics of capital outflow abroad in 2013–2022
Source: Compiled by the author based on data from World Finance
Thus, statistical data confirm the need to improve the existing tools for countering tax evasion and
capital flight and to introduce new ones in order to improve the functioning of the mechanism for coun-
tering these negative phenomena in Russia.
In turn, capital outflow and capital flight affect the country’s economic security. The main prob-
lems influencing the country’s economic security include:
1. Declining investment and slower economic growth.
Fearing economic and political instability, investors withdraw their funds from the country, re-
ducing the volume of these investments or stopping them altogether. This, in turn, reduces capital avail-
ability for the development of new projects and businesses, hampering the country’s economic growth.
2. Job cuts and rising unemployment.
Reduced investment and slower economic growth associated with capital outflow and capital flight
may lead to higher unemployment. Higher unemployment can undermine the country’s social stability
and economic security.
3. Deterioration of financial stability.
Capital flight and capital outflow can cause a deterioration in financial stability, especially if it
occurs suddenly and on a massive scale. The country may face depreciation of the national currency, a
decrease in tax revenues, and an increase in public debt. These phenomena weaken the financial stability
of the government and the government’s ability to meet its financial obligations.
4. Threats to the financial sector of the state.
Capital flight and capital outflow can threaten the financial sector by reducing the bank deposits
and assets of financial institutions, which can cause financial crises and even bank failures.
5. Impact on the exchange rate and inflation.
As mentioned above, capital flight and capital outflow can put serious pressure on the national
currency, thereby devaluing it. This, in turn, can increase the cost of imports and the inflation rate. High
inflation can negatively affect the citizens’ standard of living and the economic security of the country.
Sustain. Dev. Eng. Econ. 2024, 1, 5. https://doi.org/10.48554/SDEE.2024.1.5 80
Capital flight as a threat to the country’s economic security
6. Declining share of innovations.
Reduced investment and a deteriorating economic environment can reduce the research and inno-
vation levels in the country. This can limit economic growth potential and reduce the country’s compet-
itiveness on the global stage.
4. Discussion
This paper emphasises the relevance of the capital flight problem. The presented statistical data
confirm the consideration of this problem as a threat to the country’s economic security. The study in-
cludes such critical aspects as the scale and dynamics of capital flight from Russia, causes and conse-
quences of this capital flight, international cooperation in this area, examples of combating capital flight,
and recommendations for the necessary actions to prevent this negative phenomenon.
The authors reveal the essence of the ‘capital flight’ concept and highlight its features, highlighting
examples of its impact on the crime level and budget system revenues of the Russian Federation. In this
regard, the need to develop and implement additional measures aimed at strengthening the investment
climate, combating tax crime and corruption, and ensuring the financial stability of the country is em-
phasised. Such measures include the following:
1. Improving the investment climate.
Simplifying business registration procedures, reducing bureaucratic burdens, and ensuring proper-
ty rights protection are the key to improving the country’s investment climate.
2. Developing an effective and reasonable fiscal policy.
Developing fair and reasonable tax policies can reduce capital flight. To this end, it is possible to
reduce the tax burden and provide tax benefits.
3. Controlling capital movements.
Some countries may introduce temporary capital controls, such as restrictions on capital outflows
and foreign exchange transactions.
4. Protecting investors’ rights.
This is the guarantee of investors’ rights, including their right to judicial appeal and compensation
for damages. Such measures contribute to increasing confidence in investment in the country.
5. Transparency of the tax system and the fight against corruption.
The introduction of anti-corruption measures and active support for the development of advanced
technologies by the Federal Tax Service of Russia contribute to strengthening investor confidence.
6. International cooperation.
Cooperation with other countries and international organisations can be effective in combating
capital flight. For example, entering into bilateral tax and investment agreements can help eliminate
double taxation.
7. Supporting small and medium-sized businesses.
Incentivising and supporting small and medium-sized enterprises can make economies more di-
verse and resilient to capital flight.
8. Developing financial markets and much more.
Strengthening financial markets and their infrastructure can make the country more attractive to
investors.
81 Sustain. Dev. Eng. Econ. 2024, 1, 5. https://doi.org/10.48554/SDEE.2024.1.5
Tatevosyan, A., Garmysheva, A., Akhmedov, T.
It is important to note that comprehensive and coordinated measures are needed to combat capital
flight and capital outflow.
5. Conclusion
Ultimately, capital flight and capital outflow pose serious risks to the country’s economic security.
However, these risks can still be managed by special arrangements to combat capital flight and capital
outflow. Efforts should be made to establish an open and stable economic environment that will attract
investors and contribute to economic growth. Implementing measures to strengthen legal and financial
institutions can reduce the risks of capital flight and ensure the country’s economic security in the long
term.
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The article was submitted 09.01.2024, approved after reviewing 19.02.2024, accepted for publication 28.02.2024.
Статья поступила в редакцию 09.01.2024, одобрена после рецензирования 19.02.2024, принята к
публикации 28.02.2024.
About authors:
1. Angelina Tatevosyan, lecturer at the Department of Financial Accounting and Control, St. Petersburg
University of the Ministry of Internal Affairs of Russia, Russia. https://orcid.org/0000-0003-2717-7351,
angelinaang1@mail.ru
2. Alexandra Garmysheva, adjunct professor of the Department of Economic Security, St. Petersburg
University of the Ministry of Internal Affairs of Russia, Russia. https://orcid.org/0009-0005-1867-1042,
garmysheva.a@yandex.ru
3. Timur Akhmedov, PhD in Economics, Associate Professor of the Department of Economic Security, St.
Petersburg University of the Ministry of Internal Affairs of Russia, Russia. https://orcid.org/0000-0003-1366-030X,
ttt_tima@mail.ru
Информация об авторах:
1. Ангелина Татевосян, преподаватель кафедры финансового учета и контроля, Санкт-Петербургский
университет МВД России, Россия. https://orcid.org/0000-0003-2717-7351, angelinaang1@mail.ru
2. Александра Гармышева, адъюнкт кафедры экономической безопасности, Санкт-Петербургский
университет МВД России, Россия. https://orcid.org/0009-0005-1867-1042, garmysheva.a@yandex.ru
3. Тимур Ахмедов, кандидат экономических наук, доцент кафедры экономической безопасности,
Санкт-Петербургский университет МВД России, Россия. https://orcid.org/0000-0003-1366-030X,
ttt_tima@mail.ru
83 Sustain. Dev. Eng. Econ. 2024, 1, 5. https://doi.org/10.48554/SDEE.2024.1.5
