Hidden Treasure: The Impact of Automatic Exchange of Information on Cross-Border Tax Evasion
Electronic Access:
Free Download. Use the free Adobe Acrobat Reader to view this PDF file
Disclaimer: IMF Working Papers describe research in progress by the author(s) and are published to elicit comments and to encourage debate. The views expressed in IMF Working Papers are those of the author(s) and do not necessarily represent the views of the IMF, its Executive Board, or IMF management.
Summary:
We analyze the impact of exchange of information in tax matters in reducing international tax evasion between 1995 and 2018. Based on bilateral deposit data for 39 reporting countries and more than 200 counterparty jurisdictions, we find that recent automatic exchange of information frameworks reduced foreign-owned deposits in offshore jurisdictions by an average of 25 percent. This effect is statistically significant and, as expected, much larger than the effect of information exchange upon request, which is not significant. Furthermore, to test the sensitivity of our findings, we estimate countries’ offshore status and the impact of information exchange simultaneously using a finite mixture model. The results confirm that automatic (and not upon request) exchange of information impacts cross-border deposits in offshore jurisdictions, which are characterized by low income tax rates and strong financial secrecy.
Series:
Working Paper No. 2019/286
Subject:
Anti-money laundering and combating the financing of terrorism (AML/CFT) Bank deposits Banking Crime Double taxation Financial services Offshore financial centers Personal income tax Revenue administration Tax evasion Taxes
English
Publication Date:
December 20, 2019
ISBN/ISSN:
9781513519975/1018-5941
Stock No:
WPIEA2019286
Pages:
32
Please address any questions about this title to publications@imf.org