Methods of Estimating Trade Misinvoicing: Price-Filter Method, Partner-Country Method, and Modified Partner-Country Method

Simon J. Pak () and Cabrini H. Pak ()
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Simon J. Pak: Penn State Great Valley
Cabrini H. Pak: The Catholic University of America

Chapter Chapter 4 in Accounting for Colonialism, 2023, pp 59-87 from Springer

Abstract: Abstract International trade misinvoicing may facilitate tax avoidance, duty avoidance, money laundering, and capital transfer. It is critical for regulators to estimate the scope of trade misinvoicing correctly. This study examines three related methods of estimating trade misinvoicing: the price-filter method (PFM), the partner-country method (PCM), and a modified partner-country method (mPCM). This paper concludes that the PCM fails to estimate trade misinvoicing correctly unless all partner countries are proven to have no misinvoicing. The mPCM estimates correctly but is too costly to be practical. Only the PFM estimates trade misinvoicing correctly and efficiently.

Date: 2023
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Persistent link: https://EconPapers.repec.org/RePEc:spr:sprchp:978-3-031-32804-6_4

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DOI: 10.1007/978-3-031-32804-6_4

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