Trade misreporting

Evidence from Pakistani importers

Bibliographic Data

ID21543160
AuthorsBilal M Khan (0000-0001-6806-3962, Economics Department Asian Infrastructure Investment Bank Beijing China, corresponding author), Karrar Hussain (0000-0002-0908-842X, Institute of Economics FAU Erlangen‐Nürnberg Erlangen Germany), Zara Liaqat (0000-0002-9576-5748, Department of Economics University of Waterloo Waterloo Ontario Canada)
Year2024
Volume47
Issue2
Pages390-414
Publication date2024-02-01
Open AccessYes
TypeARTICLE
VenueWorld Economy (JOURNAL)
Journal identifiersISSN: 0378-5920 • E-ISSN: 1467-9701
PublisherWiley (PUBLISHER • GB)
DOI10.1111/twec.13398
OpenAlexW4321787368
LanguageEN
Citations received1
References cited22

This paper provides direct evidence of attempted tax evasion in response to changes in tariff rates in a small open economy using transaction‐level customs data for Pakistani importers. Our results show that there exists a systematic relationship between the difference in declared and assessed import values of the shipment, and the duty rate charged to the importer. We demonstrate that higher duty rates are associated with a greater misdeclaration of imports. In particular, a one‐percentage point increase in duty rates, on average, is linked with 0.4% increase in under‐invoicing of imports by Pakistani firms. The study explores several dimensions to examine the variation in estimates obtained across product types, import origins, modes of processing import transactions and the role of firm characteristics, such as, frequency of imports, in determining the extent of misdeclaration

Business · Commerce · Database · Database transaction · Duty · Economics · International economics · International trade · Monetary economics · Public economics · Tariff · Tax Evasion · Computer Science · Corporate Taxation and Avoidance · Fiscal Policy and Economic Growth · Law · Taxation and Compliance Studies

Tools

Open DOIOpen Access