Tax evasion through trade intermediation: Evidence from Chinese exportersXuepeng Liu, Huimin Shi and Michael Ferrantino International Review of Economics & Finance, 2016, vol. 42, issue C, 518-535 Abstract: Many production firms use intermediary trading firms to export indirectly. Using Chinese export data, we provide strong evidence that production firms can effectively evade value-added taxes (VATs) by exporting through intermediary trading firms, especially when selling differentiated products. Indirect exporting can save export taxes by 14.5% compared to direct exporting even if no intentional price under-reporting occurs, and even more when domestic purchasing price paid by a trading firm to a production firm is under-reported purposely. We also find that such under-reporting behavior through domestic intermediaries may be associated with cross-border evasion through under-reporting export values to foreign partners. Keywords: Trade intermediation; Value added tax; Tax evasion; Export tax rebates; China (search for similar items in EconPapers) Downloads: (external link) Related works: Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text Persistent link: https://EconPapers.repec.org/RePEc:eee:reveco:v:42:y:2016:i:c:p:518-535 DOI: 10.1016/j.iref.2015.10.022 Access Statistics for this article International Review of Economics & Finance is currently edited by H. Beladi and C. Chen More articles in International Review of Economics & Finance from Elsevier |
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