Does Better Information Curb Customs Fraud?

This paper examines how providing better information to customs inspectors and monitoring their actions affects tax revenue and fraud detection in Madagascar. First, an instrumental variables strategy is used to show that transaction-specific, thir...

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Main Authors:	Chalendard, Cyril, Duhaut, Alice, Fernandes, Ana M., Mattoo, Aaditya, Raballand, Gael, Rijkers, Bob
Format:	Working Paper
Language:	English
Published:	World Bank, Washington, DC 2020
Subjects:	TARIFF EVASION TAX ENFORCEMENT THIRD-PARTY INFORMATION PERFORMANCE MONITORING RISK MANAGEMENT INFORMATION PROVISION RANDOMIZED CONTROL TRIALS CUSTOMS INSPECTION TAX FRAUD
Online Access:	http://documents.worldbank.org/curated/en/554091590075089654/Does-Better-Information-Curb-Customs-Fraud http://hdl.handle.net/10986/33817

id	okr-10986-33817
recordtype	oai_dc
spelling	okr-10986-338172022-09-20T00:12:03Z Does Better Information Curb Customs Fraud? Chalendard, Cyril Duhaut, Alice Fernandes, Ana M. Mattoo, Aaditya Raballand, Gael Rijkers, Bob TARIFF EVASION TAX ENFORCEMENT THIRD-PARTY INFORMATION PERFORMANCE MONITORING RISK MANAGEMENT INFORMATION PROVISION RANDOMIZED CONTROL TRIALS CUSTOMS INSPECTION TAX FRAUD This paper examines how providing better information to customs inspectors and monitoring their actions affects tax revenue and fraud detection in Madagascar. First, an instrumental variables strategy is used to show that transaction-specific, third-party valuation advice on a subset of high-risk import declarations increases fraud findings by 21.7 percentage points and tax collection by 5.2 percentage points. Second, a randomized control trial is conducted in which a subset of high-risk declarations is selected to receive detailed risk comments and another subset is explicitly tagged for ex-post monitoring. For declarations not subject to third-party valuation advice, detailed comments increase reporting of fraud by 3.1 percentage points and improve tax yield by 1 percentage point. However, valuation advice and detailed comments have a significantly smaller impact on revenue when potential tax losses and opportunities for graft are large. Monitoring induces inspectors to scan more shipments but does not result in the detection of more fraud or the collection of additional revenue. Better information thus helps curb customs fraud, but its effectiveness appears compromised by corruption. 2020-05-28T15:30:43Z 2020-05-28T15:30:43Z 2020-05 Working Paper http://documents.worldbank.org/curated/en/554091590075089654/Does-Better-Information-Curb-Customs-Fraud http://hdl.handle.net/10986/33817 English Policy Research Working Paper;No. 9254 CC BY 3.0 IGO http://creativecommons.org/licenses/by/3.0/igo World Bank World Bank, Washington, DC Publications & Research Publications & Research :: Policy Research Working Paper Africa Madagascar
repository_type	Digital Repository
institution_category	Foreign Institution
institution	Digital Repositories
building	World Bank Open Knowledge Repository
collection	World Bank
language	English
topic	TARIFF EVASION TAX ENFORCEMENT THIRD-PARTY INFORMATION PERFORMANCE MONITORING RISK MANAGEMENT INFORMATION PROVISION RANDOMIZED CONTROL TRIALS CUSTOMS INSPECTION TAX FRAUD
spellingShingle	TARIFF EVASION TAX ENFORCEMENT THIRD-PARTY INFORMATION PERFORMANCE MONITORING RISK MANAGEMENT INFORMATION PROVISION RANDOMIZED CONTROL TRIALS CUSTOMS INSPECTION TAX FRAUD Chalendard, Cyril Duhaut, Alice Fernandes, Ana M. Mattoo, Aaditya Raballand, Gael Rijkers, Bob Does Better Information Curb Customs Fraud?
geographic_facet	Africa Madagascar
relation	Policy Research Working Paper;No. 9254
description	This paper examines how providing better information to customs inspectors and monitoring their actions affects tax revenue and fraud detection in Madagascar. First, an instrumental variables strategy is used to show that transaction-specific, third-party valuation advice on a subset of high-risk import declarations increases fraud findings by 21.7 percentage points and tax collection by 5.2 percentage points. Second, a randomized control trial is conducted in which a subset of high-risk declarations is selected to receive detailed risk comments and another subset is explicitly tagged for ex-post monitoring. For declarations not subject to third-party valuation advice, detailed comments increase reporting of fraud by 3.1 percentage points and improve tax yield by 1 percentage point. However, valuation advice and detailed comments have a significantly smaller impact on revenue when potential tax losses and opportunities for graft are large. Monitoring induces inspectors to scan more shipments but does not result in the detection of more fraud or the collection of additional revenue. Better information thus helps curb customs fraud, but its effectiveness appears compromised by corruption.
format	Working Paper
author	Chalendard, Cyril Duhaut, Alice Fernandes, Ana M. Mattoo, Aaditya Raballand, Gael Rijkers, Bob
author_facet	Chalendard, Cyril Duhaut, Alice Fernandes, Ana M. Mattoo, Aaditya Raballand, Gael Rijkers, Bob
author_sort	Chalendard, Cyril
title	Does Better Information Curb Customs Fraud?
title_short	Does Better Information Curb Customs Fraud?
title_full	Does Better Information Curb Customs Fraud?
title_fullStr	Does Better Information Curb Customs Fraud?
title_full_unstemmed	Does Better Information Curb Customs Fraud?
title_sort	does better information curb customs fraud?
publisher	World Bank, Washington, DC
publishDate	2020
url	http://documents.worldbank.org/curated/en/554091590075089654/Does-Better-Information-Curb-Customs-Fraud http://hdl.handle.net/10986/33817
_version_	1764479579058077696

Does Better Information Curb Customs Fraud?

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