The Size of Trade Misinvoicing in Pakistan

Qureshi, Tehseen Ahmed and Mahmood, Zafar (2015): The Size of Trade Misinvoicing in Pakistan. Published in: S3H Working Paper Series, National University of Science of Technology No. 04:2015 (10 July 2015): pp. 1-35.

Abstract

Trade misinvoicing has remained a critical issue for the entire developing world. Trade misinvoicing involves misreporting in the invoices of imported and exported commodities for various malign purposes. This study conducted estimation of the extent of trade misinvoicing carried out in Pakistan from 1972-2013 with its 21 developed trading partners in 52 major traded commodities. The study adopted c.i.f./f.o.b. methodology to measure discrepancies in the partner countries data. All four components of trade misinvoicing, i.e., imports under-invoicing, imports over-invoicing, exports under-invoicing and exports over-invoicing are estimated here. The study finds that total trade misinvoicing in Pakistan for the overall period of 41 years was more than $92.7 billion and on average, annual trade misinvoicing is estimated at $2.25 billion. The gross revenue losses incurred to the national exchequer due to trade misinvoicing in the overall period was estimated at $21.2 billion with an annual average of $0.5 billion. Moreover, the total net loss was estimated to be $11 billion for the total period and annually the national exchequer is deprived of $0.26 billion in the form of the evasion of customs duties and exports withholding tax.

• Item Type: MPRA Paper
• Language: English
• Keywords: Trade Misinvoicing, Revenue Loss, Capital Flight, Reverse Capital Flight
• Subjects: F - International Economics > F1 - Trade > F13 - Trade Policy ; International Trade Organizations; F - International Economics > F1 - Trade > F14 - Empirical Studies of Trade; H - Public Economics > H2 - Taxation, Subsidies, and Revenue > H26 - Tax Evasion and Avoidance; K - Law and Economics > K4 - Legal Procedure, the Legal System, and Illegal Behavior > K42 - Illegal Behavior and the Enforcement of Law; O - Economic Development, Innovation, Technological Change, and Growth > O1 - Economic Development > O17 - Formal and Informal Sectors ; Shadow Economy ; Institutional Arrangements

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