**Table A1: Variable Definitions, 3/5**

|**Variable name**|**Variable defnition and data source(s)**|
|---|---|
|**E. Customs outcomes, continue**|**d**|
|Hypothetical tax revenue losses (ex-<br>ternal reference prices)|Computed as log (1+ (tax rate _×_ average fnal external reference price _×_ fnal<br>weight retained by customs)) - log (1 + (tax rate _×_ fnal value retained by<br>customs)). Defned at the declaration level. Sources: Madagascar customs and<br>UN COMTRADE.|
|Hypothetical tax revenue losses (ex-<br>ternal reference prices & port au-<br>thority weight)|Computed as log (1+ (tax rate _×_ average fnal external reference price _×_ port<br>authority weight)) - log (1 + (tax rate _×_ fnal value retained by customs)).<br>Defned at the declaration level. Sources: Madagascar customs, MICTSL and UN<br>COMTRADE.|
|Hypothetical tax revenue losses<br>(valuation advice)|Computed as log (1+ (tax rate _×_ reference value F.O.B. suggested by third-party<br>GasyNet)) - log (1 + (tax rate _×_ fnal value retained by customs)). Defned at<br>the declaration level. Sources: Madagascar customs and GasyNet.|
|**F.** **_Ex-ante_ risk characteristics **|**& other characteristics of declarations**|
|Tax rate|Sum of taxes (including tarifs as well as Value Added Taxes) that have to be<br>paid divided by the import value retained by customs. Defned at the declaration<br>level. Source: Madagascar customs.|
|Risk score|Score calculated by GasyNet that indicates the risk of tax evasion for the import<br>declaration ranging from 1 (very low risk) to 9 (very high risk). Defned at the<br>declaration level. Source: GasyNet.|
|Red channel dummy|Dummy variable that takes value 1 if the customs risk management system routed<br>the declaration to the frontline inspection channel (red channel) and 0 otherwise.<br>Defned at the declaration level. Source: Madagascar customs.|
|Mixed shipment dummy|Dummy variable that takes value 1 if the import declaration includes more than<br>1 HS 6-digit product and 0 otherwise. Defned at the declaration level. Source:<br>Madagascar customs.|
|Diferentiated share|Share of HS 6-digit products in the import declaration that are defned as difer-<br>entiated according to the conservative classifcation by Rauch (1999). Defned<br>at the declaration level. Source: Rauch (1999) and a concordance between HS<br>6-digit revision 2012 classifcation and SITC revision 2 classifcation from UN<br>COMTRADE.|
|Valuation advice dummy|Dummy variable that takes value 1 if GasyNet provided a valuation advice for<br>this import declaration and 0 otherwise. Defned at the declaration level. Source:<br>GasyNet.|
|Log initial value|Log of the initially declared import value in USD (converted from Ariary using<br>monthly exchange rates calculated as an average of daily exchange rates from<br>the Central Bank of Madagascar). Defned at the declaration level. Source:<br>Madagascar customs.|
|Log initial weight|Log of the initially declared total weight (in kilograms). Defned at the declaration<br>level. Source: Madagascar customs.|
|Log port authority weight|Log of the sum of the weight of all containers used to ship the goods included in<br>the import declaration measured at the port upon arrival (in kilograms). Defned<br>at the declaration level (for containerized declarations). Source: Madagascar<br>International Container Terminal Services Limited (MICTSL).|
|Log initial unit price (relative to<br>internal prices)|Diference between the log of the initial average internal reference price of the<br>declaration and the log of the initially submitted unit price by the importer or his<br>representative (defned as the weighted average of the unit prices (values divided<br>by weights) for all items included in the import declaration, with weights being<br>the initially submitted weights for each item). Defned at the declaration level.<br>Source: Madagascar customs.|
|Initial hypothetical tax revenue<br>losses (internal prices)|Computed as log(1+ (total taxation rate _×_ initial average internal reference price<br>_×_ initially submitted weight by the importer or his representative))-log(1 + (total<br>taxation rate _×_ initially submitted value by the importer or his representative)).<br>Defned at the declaration level. Source: Madagascar customs.|

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