RELIABILITY OF UNDERINVOICING REVEALING METHODS: CASE STUDY UKRAINE

Abstract

Goods mispricing in international trade is regarded as customs fraud according to the WCO typology and reveals itself as a great challenge for customs and tax bodies all over the world. Revenue losses, tax avoidance, mispricing and other types of fraud create significant obstacles in the development of the social sphere, especially in the government programs implementing, which in the long run has a very negative impact on the investment climate and the development of national economies in general. Empirical data are examined to estimate accuracy and reliability of certain methods of statistical analysis in the context of targeted control enhancing. The benefits of multistage approach are shown, which can be used to reveal possible violations of customs law and prevent significant under-invoicing of imported goods. The objective of this research is to study the basic features of the most widely applied methods of abnormal pricing estimation and to examine a possibility to combine two mainly applied approaches to enhance robustness of the obtained data and credibility of the analysis results. An attempt is made to define basic efficient tool which could be used by customs authorities for further development of customs value control strategy. To accomplish the research task, general scientific methods are applied, such as inductive logic, comparative and statistical analysis as well as generalisation. The main points of widely applied mirror data analysis and price filter method are examined focusing special attention on the shortcomings and ways to diminish possible mistakes. Crucial role of appropriate statistical data and other available information using is shown to reveal potential underinvoicing, tax avoidance and other fraudulent trade activities. Possibilities of the two-staged statistical analysis of customs value indices as risks-oriented mechanism in national customs valuation database are investigated. The calculated figures show noticeable discrepancies in customs values declared at export and import. The paper identifies advantages of multistage analysis of available trade statistics data to facilitate the customs valuation control targeting and further process automation.