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Trade Misinvoicing: What can we Measure?

Author

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  • Tandon, Suranjali

    (National Institute of Public Finance and Policy)

  • Rao, R. Kavita

    (National Institute of Public Finance and Policy)

Abstract

The existing studies on trade misinvoicing have focussed on the discrepancy in reported trade statistics between developing and developed countries. The estimates based on such methods rely on the assumption that developed countries report their trade statistics correctly. In this paper, we provide evidence that trade misinvoicing between developed countries is in fact large and any esti-mate based on such method may not provide an accurate representation of the dimensions of trade misinvoicing in the world. Further, there is need to develop a methodology by which one can attribute the misinvoicing to one or the other trade partner. To address this problem, we offer an alternative methodology. Since the exports of a country are necessarily imports of another country we use do-mestic factors to predict the export and import misinvoicing for a sample of large misinvoicers for the period 1990 to 2014. Such estimates allow us to establish whether the discrepancy can be at-tributed to the export or the import side for all countries. We find that the domestic factors better explain the export side, therefore, allowing us to estimate illicit flows through trade misinvocing us-ing the export misinvoicing by all countries.

Suggested Citation

  • Tandon, Suranjali & Rao, R. Kavita, 2017. "Trade Misinvoicing: What can we Measure?," Working Papers 17/200, National Institute of Public Finance and Policy.
  • Handle: RePEc:npf:wpaper:17/200
    Note: Working Paper 200, 2017
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    References listed on IDEAS

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    Cited by:

    1. Tiwari, Atul Kumar & Ghei, Dhananjay & Goel, Prerna, 2017. "Social Security Agreements (SSAs) in practice: Evidence from India's SSAs wih countries in Europe," Working Papers 17/203, National Institute of Public Finance and Policy.
    2. Carton, Christine & Slim, Sadri, 2018. "Trade misinvoicing in OECD countries: what can we learn from bilateral trade intensity indices?," MPRA Paper 85703, University Library of Munich, Germany.
    3. Olle Östensson, 2018. "Misinvoicing in mineral trade: what do we really know?," Mineral Economics, Springer;Raw Materials Group (RMG);Luleå University of Technology, vol. 31(1), pages 77-86, May.

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    More about this item

    Keywords

    illicit financial flows ; misinvoicing ; developing countries ; corruption ; tariffs ; capital controls;
    All these keywords.

    JEL classification:

    • H26 - Public Economics - - Taxation, Subsidies, and Revenue - - - Tax Evasion and Avoidance
    • H87 - Public Economics - - Miscellaneous Issues - - - International Fiscal Issues; International Public Goods

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