Estimating Border Tax Evasion in Mozambique

TLDR: In this article, the relationship between border tax rates and evasion was examined for Mozambique using the methodology developed by Fisman and Wei (2004) and they found that high tax rates are associated with high levels of underreporting of import values and that tax rates have a strong and positive effect on tax evasion.

Abstract: The relationship between border tax rates and evasion is examined for Mozambique using the methodology developed by Fisman and Wei (2004). We find that high tax rates are associated with high levels of under-reporting of import values and that tax rates have a strong and positive effect on tax evasion. Results also strongly confirm the presence of fraudulent classification of merchandise into lower taxed product categories. Finally, analysis of the revenue implications of lower trade taxes finds that the revenue curve is quite flat but remains upward sloping with respect to the tax rate when only evasion is considered.