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

17 Pages Posted: 5 Jan 2021

See all articles by Emmanouil Kitsios

Emmanouil Kitsios

International Monetary Fund (IMF)

João Tovar Jalles

University of Lisbon; International Monetary Fund (IMF); Technical University of Lisbon (UTL) - Research Unit on Complexity and Economics (UECE)

Genevieve Verdier

International Monetary Fund (IMF) - IMF Institute

Date Written: November 2020

Abstract

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.

JEL Classification: H30, H26, O30, C23, O33, H25, F13, F10

Suggested Citation

Kitsios, Emmanouil and Jalles, João Tovar and Verdier, Genevieve, Tax Evasion from Cross-Border Fraud: Does Digitalization Make a Difference? (November 2020). IMF Working Paper No. 20/245, Available at SSRN: https://ssrn.com/abstract=3758078

Emmanouil Kitsios (Contact Author)

International Monetary Fund (IMF) ( email )

700 19th Street, N.W.
Washington, DC 20431
United States

João Tovar Jalles

University of Lisbon ( email )

R. Branca Edmée Marques
Dept. Plant Biology
Lisboa, 1600-276
Portugal

International Monetary Fund (IMF) ( email )

700 19th Street, N.W.
Washington, DC 20431
United States

Technical University of Lisbon (UTL) - Research Unit on Complexity and Economics (UECE)

Rua Miguel Lupi, 20
Lisboa, 1200-781
Portugal

Genevieve Verdier

International Monetary Fund (IMF) - IMF Institute ( email )

700 19 th Street NW
Washington, DC 20431
United States

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