IMF Working Papers

Tax Evasion from Cross-Border Fraud: Does Digitalization Make a Difference?

By Emmanouil Kitsios, João Tovar Jalles, Genevieve Verdier

November 13, 2020

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Format: Chicago

Emmanouil Kitsios, João Tovar Jalles, and Genevieve Verdier. Tax Evasion from Cross-Border Fraud: Does Digitalization Make a Difference?, (USA: International Monetary Fund, 2020) accessed November 8, 2024

Disclaimer: IMF Working Papers describe research in progress by the author(s) and are published to elicit comments and to encourage debate. The views expressed in IMF Working Papers are those of the author(s) and do not necessarily represent the views of the IMF, its Executive Board, or IMF management.

Summary

How can governments reduce the prevalence of cross-border tax fraud? This paper argues that the use of digital technologies offers an opportunity to reduce fraud and increase government revenue. Using data on intra-EU and world trade transactions, we present evidence that (i) cross-border trade tax fraud is non-trivial and prevalent in many countries; (ii) such fraud can be alleviated by the use of digital technologies at the border; and (iii) potential revenue gains of digitalization from reducing trade fraud could be substantial. Halving the distance to the digitalization frontier could raise revenues by over 1.5 percent of GDP in low-income developing countries.

Subject: Digitalization, Imports, International trade, Revenue administration, Tariffs, Tax evasion, Taxes, Technology, Value-added tax

Keywords: Africa, Carousel fraud, Digitalization, Digitalization index, East Africa, E-government, Europe, Fiscal policy, Government policy, Imports, North Africa, Panel data, Sub-Saharan Africa, Tariff revenue, Tariffs, Tax authority, Tax evasion, Taxation, Technology, Transaction data, Value-added tax, VAT revenue, WP

Publication Details

  • Pages:

    16

  • Volume:

    ---

  • DOI:

    ---

  • Issue:

    ---

  • Series:

    Working Paper No. 2020/245

  • Stock No:

    WPIEA2020245

  • ISBN:

    9781513561189

  • ISSN:

    1018-5941

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