Outsourcing Tariff Evasion
AbstractTraditional explanations for indirect trade carried out through an entrepÃ´t have focused on savings in transport costs and on the role of specialized agents in processing and distribution. We provide an alternative perspective based on the possibility that entrepÃ´ts may facilitate tariff evasion. Using data on direct exports to mainland China and indirect exports to it via Hong Kong SAR, we find that the indirect export rate rises with the Chinese tariff rate, even though there is no legal tax advantage to sending goods via Hong Kong SAR. We undertake a number of extensions to rule out plausible alternative hypotheses.
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Bibliographic InfoPaper provided by International Monetary Fund in its series IMF Working Papers with number 05/102.
Date of creation: 01 May 2005
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This paper has been announced in the following NEP Reports:
- NEP-ALL-2005-10-22 (All new papers)
- NEP-INT-2005-10-22 (International Trade)
- NEP-PBE-2005-10-22 (Public Economics)
- NEP-TRA-2005-10-22 (Transition Economics)
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