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Determinants and pervasiveness of the evasion of custom duties

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  • Jean, Sébastien
  • Mitaritonna, Cristina

Abstract

Evasion of customs duties is a serious concern in developing countries, where tariff receipts are often important, but their collection is often problematic. We study theoretically and empirically the determinants of evasion across countries and products, based on a systematic analysis of discrepancies in trade declarations - when available - for both partners. We conclude that evasion of customs duties is greater in poorer countries, especially where the rule of law is limited. The consequences are likely to be the most serious in the poorest countries, where we find a one percentage point higher tariff to be associated on average with an understatement of imports of 1% or more. We assess some policy remedies and conclude that automated customs data treatment may be particularly useful.
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Suggested Citation

  • Jean, Sébastien & Mitaritonna, Cristina, 2009. "Determinants and pervasiveness of the evasion of custom duties," Conference papers 331896, Purdue University, Center for Global Trade Analysis, Global Trade Analysis Project.
    • Handle: RePEc:ags:pugtwp:331896
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    References listed on IDEAS

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    2. Cyril CHALENDARD, 2015. "Use of Internal Information, External Information Acquisition and Customs Underreporting," Working Papers 201522, CERDI.
    3. Ayadi, Lotfi & Benjamin, Nancy & Bensassi, Sami & Raballand, Gael, 2013. "Estimating informal trade across Tunisia's land borders," Policy Research Working Paper Series 6731, The World Bank.
    4. Joël CARIOLLE & Cyril CHALENDARD & Anne-Marie GEOURJON & Bertrand LAPORTE, 2017. "Going beyond analysis of internal data to support customs modernization: a case study in Gabon," Working Papers P173, FERDI.
    5. Lionel Fontagné & Gianluca Orefice & Roberta Piermartini, 2020. "Making small firms happy? The heterogeneous effect of trade facilitation measures," Review of International Economics, Wiley Blackwell, vol. 28(3), pages 565-598, August.
    6. Julien Gourdon & Laura Hering & Stéphanie Monjon & Sandra Poncet, 2022. "Estimating the repercussions from China's export value‐added tax rebate policy," Scandinavian Journal of Economics, Wiley Blackwell, vol. 124(1), pages 243-277, January.
    7. Clement Anne & Cyril Chalendard & Ana Fernandes & Bob Rijkers & Vincent Vicard & Ana Margarida Fernandes, 2023. "Containing Tariff Evasion," CESifo Working Paper Series 10795, CESifo.
    8. Sami Bensassi & Anne Brockmeyer & Matthieu Pellerin & Gael Raballand, 2015. "Algeria-Mali Trade," World Bank Publications - Reports 23355, The World Bank Group.
    9. Bob Rijkers & Leila Baghdadi & Gael Raballand, 2017. "Political Connections and Tariff Evasion Evidence from Tunisia," The World Bank Economic Review, World Bank, vol. 31(2), pages 459-482.
    10. Beverelli, Cosimo & Ticku, Rohit, 2022. "Reducing tariff evasion: The role of trade facilitation," Journal of Comparative Economics, Elsevier, vol. 50(2), pages 534-554.
    11. Sami Bensassi & Anne Brockmeyer & Mathieu Pellerin & Gaël Raballand, 2017. "Algeria–Mali trade: the normality of informality," Middle East Development Journal, Taylor & Francis Journals, vol. 9(2), pages 161-183, July.
    12. Joel CARIOLLE & Cyril CHALENDARD & Anne-Marie GEOURJON & Bertrand LAPORTE, 2016. "Décloisonner l’analyse des données pour appuyer la modernisation des douanes : une illustration à partir du Gabon," Working Papers 201618, CERDI.
    13. Cyril Chalendard, 2015. "Use of internal information, external information acquisition and customs underreporting," CERDI Working papers halshs-01179445, HAL.
    14. Bilal M. Khan & Karrar Hussain & Zara Liaqat, 2024. "Trade misreporting: Evidence from Pakistani importers," The World Economy, Wiley Blackwell, vol. 47(2), pages 390-414, February.
    15. Ferrantino, Michael J. & Liu, Xuepeng & Wang, Zhi, 2012. "Evasion behaviors of exporters and importers: Evidence from the U.S.–China trade data discrepancy," Journal of International Economics, Elsevier, vol. 86(1), pages 141-157.
    16. Federica DeMaria & Chiara Franco & Nazaria Solferino, 2015. "Corruption and innovation: the mediating role of trade," AICCON Working Papers 139-2015, Associazione Italiana per la Cultura della Cooperazione e del Non Profit.
    17. Mirco Tonin, 2014. "Reporting import tariffs (and other taxes)," International Tax and Public Finance, Springer;International Institute of Public Finance, vol. 21(1), pages 153-173, February.
    18. Tasew Tadesse, 2023. "Explaining Customs Tax Evasion in Ethiopia: The Effect of Trade Tax, Law Enforcement, and Product Characteristics," Global Journal of Emerging Market Economies, Emerging Markets Forum, vol. 15(3), pages 330-353, September.
    19. Temesgen Worku & Juan P. Mendoza & Jacco L. Wielhouwer, 2016. "Tariff evasion in sub-Saharan Africa: the influence of corruption in importing and exporting countries," International Tax and Public Finance, Springer;International Institute of Public Finance, vol. 23(4), pages 741-761, August.
    20. Mehdi Abid, 2019. "Estimating the Size of the Informal Trade Across the World: Evidence from a MIMIC Approach," Journal of the Knowledge Economy, Springer;Portland International Center for Management of Engineering and Technology (PICMET), vol. 10(2), pages 618-669, June.
    21. Julien Gourdon & Laura Hering & Stéphanie Monjon & Sandra Poncet, 2022. "Estimating the Repercussions from China’s Export VAT Rebate Policy," Post-Print hal-03274542, HAL.
    22. Zara Liaqat, Karrar Hussain, 2025. "Costly Imports: Exchange rate shocks and trade misreporting by firms," LCERPA Working Papers jc0154, Laurier Centre for Economic Research and Policy Analysis, revised 2025.
    23. Michael, Bryane & Popov, Maja, 2012. "Do Customs Trade Facilitation Programmes Help Reduce Customs-Related Corruption?," EconStor Preprints 109021, ZBW - Leibniz Information Centre for Economics.
    24. Lorenzo Rotunno & Pierre-Louis Vézina, 2012. "Chinese Networks and Tariff Evasion," The World Economy, Wiley Blackwell, vol. 35(12), pages 1772-1794, December.

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    Keywords

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    JEL classification:

    • F13 - International Economics - - Trade - - - Trade Policy; International Trade Organizations
    • H26 - Public Economics - - Taxation, Subsidies, and Revenue - - - Tax Evasion and Avoidance
    • K42 - Law and Economics - - Legal Procedure, the Legal System, and Illegal Behavior - - - Illegal Behavior and the Enforcement of Law

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