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Export Tax and Tariff Evasion: Evidence of Misinvoicing in China-New Zealand Trade

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Abstract

The trade between New Zealand and China has grown rapidly after the signing of their free trade agreement, but it is difficult to gauge the exact growth in trade due to gross inconsistencies in the trade data provided by the two countries. We investigate the roles that tax and tariff evasion play in systematically explaining this discrepancy. We find that exports and imports are heavily underreported at the Chinese border to avoid having to pay China's value-added tax and import tariffs. We also find some evidence of underreporting of imports at the New Zealand border to avoid import tariffs.

Suggested Citation

  • Kuntal K. Das & Laura Meriluoto & Amy Rice, 2016. "Export Tax and Tariff Evasion: Evidence of Misinvoicing in China-New Zealand Trade," Working Papers in Economics 16/35, University of Canterbury, Department of Economics and Finance.
    • Handle: RePEc:cbt:econwp:16/35
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    File URL: https://repec.canterbury.ac.nz/cbt/econwp/1635.pdf
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    References listed on IDEAS

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    1. Javorcik, Beata S. & Narciso, Gaia, 2008. "Differentiated products and evasion of import tariffs," Journal of International Economics, Elsevier, vol. 76(2), pages 208-222, December.
    2. 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.
    3. Andreas Buehn & Stefan Eichler, 2011. "Trade Misinvoicing: The Dark Side of World Trade," The World Economy, Wiley Blackwell, vol. 34(8), pages 1263-1287, August.
    4. Ferrantino, Michael J. & Wang, Zhi, 2008. "Accounting for discrepancies in bilateral trade: The case of China, Hong Kong, and the United States," China Economic Review, Elsevier, vol. 19(3), pages 502-520, September.
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    More about this item

    Keywords

    Trade misinvoicing; Export VAT rebate; Tax evasion; Tariff evasion;
    All these keywords.

    JEL classification:

    • F14 - International Economics - - Trade - - - Empirical Studies of Trade
    • F38 - International Economics - - International Finance - - - International Financial Policy: Financial Transactions Tax; Capital Controls

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