Trade misreporting: Evidence from Pakistani importers

Khan BM, Hussain K, Liaqat Z (2023)

Publication Type: Journal article

Publication year: 2023

Journal

Abstract

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.

Authors with CRIS profile

Karrar Hussain Lehrstuhl für Volkswirtschaftslehre: Wirtschaft und Gesellschaft des Nahen Ostens

Additional Organisation(s)

FAU Profilzentrum Licht.Materie.Quantentechnologien (FAU LMQ)

Involved external institutions

Asian Infrastructure Investment Bank (AIIB)

China (CN) University of Waterloo (UW)

Canada (CA)

How to cite

APA:

Khan, B.M., Hussain, K., & Liaqat, Z. (2023). Trade misreporting: Evidence from Pakistani importers. World Economy. https://dx.doi.org/10.1111/twec.13398

MLA:

Khan, Bilal M., Karrar Hussain, and Zara Liaqat. "Trade misreporting: Evidence from Pakistani importers." World Economy (2023).

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