Cross-border tax evasion after the common reporting standard: Game over?

Casi, Elisa; Spengel, Christoph; Stage, Barbara

doi:10.1016/j.jpubeco.2020.104240

Cited by 45 publications

(50 citation statements)

References 32 publications

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“…The authors thus identified a redistributive impact of FATCA, suggesting that the United States' refusal to reciprocate AIE increased its attractiveness for capital formerly hidden in secrecy jurisdictions. Casi et al (2020) broadly confirmed these findings about the United States and presented evidence of an 11.5 percent short-term decrease in bank deposits by residents of nonhavens in secrecy jurisdictions which had adopted the CRS. In line with these findings, O' Reilly et al (2019) found that AIE has led to a reduction of deposits in international financial centers.…”

Section: Conflicting Empirical Findings In Aie Literaturesupporting

confidence: 66%

“…(p. 27). A similar call for caution was expressed by Casi et al (2020) who interpreted their findings as a change in the dynamics of cross-border tax evasion rather than as its end. Furthermore, Juel Andersen et al (2020) provided evidence that aid monies disbursed to developing countries coincide with increased deposits in secrecy jurisdictions, a trend that has continued despite the secrecy jurisdictions' growing participation in AIE, suggesting a limited impact of AIE on the tax evasion of residents of developing countries.…”

Section: Conflicting Empirical Findings In Aie Literaturementioning

confidence: 87%

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Is Panama really your tax haven? Secrecy jurisdictions and the countries they harm

Jánský

Meinzer

Palanský

2021

Regulation & Governance

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Secrecy jurisdictions provide opportunities for nonresidents to escape the laws and regulations of their home countries by allowing them to hide their identities. In this paper we quantify which jurisdictions supply secrecy to which countries and assess how successful countries are in targeting that secrecy with their policies. To that objective, we develop the Bilateral Financial Secrecy Index (BFSI) which maps the financial secrecy faced by 82 countries and supplied to them by 131 jurisdictions, thus providing the study of the world of financial secrecy with unprecedented nuance. We then use the BFSI to evaluate the progress of two recent policy initiatives designed to curb financial secrecy: automatic information exchange (AIE) and the blacklisting of noncooperative jurisdictions. By embedding the role of power in the center of our analytical framework, we reconcile the apparently conflicting findings of the existing literature on the effectiveness of these policies. We show that secrecy jurisdictions engage in selective resistance depending on whom they are dealing with, and that the hypocrisy of Organisation for Economic Co‐Operation and Development member countries lies at the heart of the design and operation of the AIE system and the blacklisting exercise. We argue that focusing policy on the most relevant secrecy jurisdictions, which – despite its pivotal role in recent offshore document leaks – only rarely include Panama, would enable countries to more effectively mitigate the harm caused by financial secrecy.

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Section: Conflicting Empirical Findings In Aie Literaturesupporting

confidence: 66%

Section: Conflicting Empirical Findings In Aie Literaturementioning

confidence: 87%

Is Panama really your tax haven? Secrecy jurisdictions and the countries they harm

Jánský

Meinzer

Palanský

2021

Regulation & Governance

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“…Moreover, recent studies suggest that countries that have never been included in tax haven lists may also have lax beneficial ownership rules (see e.g. Casi et al 2020). If formal ownership of an offshore account was transferred to a trustee in a country not considered a tax haven by Ahrens and Bothner, the value of inter-haven deposits would also remain unchanged.…”

Section: Assessing Regulatory Arbitrage Of the Aeimentioning

confidence: 99%

A victim of regulatory arbitrage? Automatic exchange of information and the use of golden visas and corporate shells

Ahrens

Hakelberg

Rixen

2020

Regulation & Governance

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The multilateral adoption of the automatic exchange of information (AEI) on bank accounts held by nonresidents was a breakthrough in the fight against cross-border tax evasion, which led to a substantial reduction in the value of bank deposits and investment portfolios in traditional tax havens. However, there is suspicion that sophisticated tax evaders engage in regulatory arbitrage of AEI provisions. We examine whether two widely discussed secrecy schemes, namely golden visas and anonymous trusts and shell corporations, have been used to circumvent information reporting. Relying on a difference-indifference design, we only find scattered evidence for use of the secrecy schemes. Overall, our results suggest that regulatory arbitrage is not yet widespread, but it seems to increase over time. We thus provide evidence for the current effectiveness of the AEI but also show that closing remaining loopholes is of utmost importance. We link our findings to debates about the (im)possibility of re-embedding neoliberal globalization.

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“…Income shifting and profit shifting are used synonymously throughout this study. 2 A further example is the implementation of a global multilateral standard for the Automatic Exchange Of Information regarding financial accounts, which is found to be effective as deposits in tax havens were significantly reduced after its implementation (Casi et al 2020). 3 E.g., (OECD 2015a, b, c;Mazars 2015;PwC 2015;Picciotto 2017;Parnes 2018).…”

Section: Introductionmentioning

confidence: 99%

Multinational ownership patterns and anti-tax avoidance legislation

Prettl

Hagen

2022

Int Tax Public Finance

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We investigate whether controlled foreign corporation (CFC) rules influence cross-border merger and acquisition (M&A) activity on a global scale. CFC rules are one main anti-tax avoidance measure and potentially lead to immediate taxation of foreign subsidiaries’ income at parent level. Analyzing a large M&A data set and detailed self-compiled CFC rule data from 27 countries using two different econometric perspectives, we show if and how CFC rules distort firm behavior and ownership patterns. First, we find that the probability of being the acquirer of a low-tax target decreases if CFC rules may be applicable to this target’s income. Second, we show that CFC rules alter an acquirer’s choice of targets’ location. Altogether, our study shows that for affected acquirer countries, CFC rules lead to less M&A activity in low-tax countries due to potentially reduced incentives to shift income. However, these effects appear to be rather small in size and decrease over time. Thus, our study suggests that CFC rules do not substantially bias the market for corporate control as lobby groups partially claim and policy makers can be confident in reaching their goals of diminishing profit shifting with this increasingly important anti-tax avoidance rule.

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Cross-border tax evasion after the common reporting standard: Game over?

Cited by 45 publications

References 32 publications

Is Panama really your tax haven? Secrecy jurisdictions and the countries they harm

Is Panama really your tax haven? Secrecy jurisdictions and the countries they harm

A victim of regulatory arbitrage? Automatic exchange of information and the use of golden visas and corporate shells

Multinational ownership patterns and anti-tax avoidance legislation

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