Evasion of import duties: an economic analysis of the case of Tanzania.

dc.contributor.authorMpango, Philip Isdor N.
dc.descriptionAvailable in print formen_US
dc.description.abstractThis study analyses the phenomenon of import duty evasion through deliberate false reporting of import duty entries in the case of Tanzania 1976-91. Two main questions are addressed. First, to what extent are imports under-invoiced in Tanzania? Second, what factors determine the level and structure of the under-invoicing of imports? The analysis has established that about 40 per cent of Tanzania's 'true' imports is mis-reported annually and that the relative size of under-invoicing and over-invoicing is about the same (20 per cent). Four main determinants of under-invoicing of imports in Tanzania are identified. First, under-invoicing is positively and significantly related to the scheduled tariff levels. Although this relation is found to be weak at the aggregate level, it is stronger in SITC sections that are subject to relatively higher import duties compared to low-tariff SITC sections. Second, this study finds a strong positive relationship between under-invoicing of imports and the exchange rate, and that this exchange rate effect dominates the tariff level effect. Consequently, tariff reductions with devaluation appear to have actually worsened import duty compliance during the trade liberalisation period. Third, under-invoicing is also found to be negatively related to the level of real salaries and other work-incentives to customs personnel. Thus, while a nominal wage freeze is often recommended to effect a real devaluation, low wages (at least of the customs personnel) worsen import duty compliance and contribute to widening budget deficits. Fourth, under-invoicing is more common in SITC classes with differentiated products and many importers and is also concentrated in imports originating from just a few of Tanzania's main trading partners. The analysis also indicates two anomalies. First, some imports that are duty-free or subject to low tariffs are substantially under-invoiced. Second, the study also finds large differences in underinvoicing with regard to country of origin. The reasons for these anomalies are not very apparent although dumping and differences in the composition of imports are inferred to play a part respectively.en_US
dc.identifier.citationMpango, P. I. N. (1996). Evasion of import duties: an economic analysis of the case of Tanzania. Master dissertation, University of Dar es Salaam. Available at (
dc.publisherUniversity of Dar es Salaamen_US
dc.subjectTax evasionen_US
dc.titleEvasion of import duties: an economic analysis of the case of Tanzania.en_US