 Tax avoidance through re-imports: The case of redundant tradeJournal of Development Economics, 2013, vol. 104, issue C, 152-164 Abstract: Many countries have participated in re-imports, a type of round-trip trade originating from a country and back to the same country. China, as the largest re-importer, has imported more from itself than from the U.S. since 2005. As the first empirical study on re-imports, this paper shows that China's re-imports are at least partially driven by the imperfection of the value-added tax (VAT) rebate policy for processing trade. In principle, firms should be able to claim input VAT credits after selling their finished products in China, or receive input VAT rebates after exporting their products. Some processing firms, however, are not qualified for the credits or rebates when selling in China; hence, they may export their products to obtain rebates. Some downstream processing firms can benefit from re-importing these products duty-free as inputs because they cannot obtain the rebates when buying inputs in China even after exporting their final goods. Keywords: Tax avoidance; Tax evasion; Re-imports; Export tax rebate; Processing trade (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:deveco:v:104:y:2013:i:c:p:152-164 DOI: 10.1016/j.jdeveco.2013.05.007 Access Statistics for this article Journal of Development Economics is currently edited by M. R. Rosenzweig More articles in Journal of Development Economics from Elsevier |
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