Tax Evasion through Trade Intermediation : Evidence from Chinese Exporters

Liu, Xuepeng; Shi, Huimin; Ferrantino, Michael

Tax Evasion through Trade Intermediation : Evidence from Chinese Exporters

2015

Liu, Xuepeng | Shi, Huimin | Ferrantino, Michael

Many production firms use intermediary trading firms to export indirectly. This paper uses Chinese export data at the transaction level to investigate the tax evasion motive through indirect trade. The paper provides strong evidence that, under Chinas partial export value-added tax rebate policy, production firms can effectively evade value-added taxes by underreporting their selling prices to domestic intermediary trading firms, especially when they sell differentiated products. Even for a moderate level of underreporting, the revenue loss is close to one billion U.S. dollars. The paper also finds that such underreporting behavior through domestic intermediaries may be associated with cross-border evasion through underreporting export values to foreign partners. In addition, the results indicate that the evasion motive is stronger for larger transactions.

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Palabras clave de AGROVOC

accounting agriculture barter budget consumers contracts credit development economics domestic markets dumping economics elasticity equipment equity expenditure exports finance fixed costs globalization growth rate incentives income tax inputs instrument international bank international trade inventories investment liabilities liquidity markets microstructure ownership prices pricing product quality production products property public finance purchasing retail sales surplus tariffs taxation taxes trade trade liberalization value added welfare wto

Información bibliográfica

Editorial

World Bank, Washington, DC

Otras materias

Export performance; Shares; General equilibrium analysis; Development policy; Ownership structure; Market microstructure; Contract; Double taxation; Foreign markets; Price level; Market size; Check; Value; Transaction; Average price; Tariff; Criteria; Default; Equilibrium analysis; Finished products; Return; Transactions; Export growth; Dummy variable; Federal reserve bank; Goods; International economics; Product differentiation; Elasticity of substitution; Price; Expected value; Profits; Trading; Revenue; Issuance; Positive coefficient; Political economy; Contract enforcement; Substitution; Trade regime; Theory; Competitiveness; Rebates; Tax benefit; Influence; Exchange; Small business; Rebate; Federal reserve; Financial crisis; Trade regimes; Benchmark; Foreign market; Comparative economics; Economies of scope; Product; Variables; Market; Local governments; Tax rate; Middleman; Adverse selection; Wholesalers; Homogeneous goods; Tax; Guarantees; Budget constraint; Interest; Export share; Share; Guarantee; Tax rates; Checks; Exchanges; Developing country; Exporter; Reserve; Export shares; Reserve bank; Exporters; Global economy; Tax incentives; Middlemen

Licencia

CC BY 3.0 IGO. http://creativecommons.org/licenses/by/3.0/igo/. World Bank

Tipo

Working Paper; Publications & Research; Publications & Research :: Policy Research Working Paper

Fuente

Policy Research Working Paper;No. 7232

En AGRIS desde: 2022-09-15

Formato: AGRIS AP

Proveedor de Datos

Este registro bibliográfico ha sido proporcionado por World Bank

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