IMF Working Papers

Hidden Treasure: The Impact of Automatic Exchange of Information on Cross-Border Tax Evasion

By Sebastian Beer, Maria Delgado Coelho, Sebastien Leduc

December 20, 2019

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Sebastian Beer, Maria Delgado Coelho, and Sebastien Leduc. Hidden Treasure: The Impact of Automatic Exchange of Information on Cross-Border Tax Evasion, (USA: International Monetary Fund, 2019) accessed November 8, 2024

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.

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

Keywords: Anti-money laundering and combating the financing of terrorism (AML/CFT), Bank deposit, Biases result, Cross-border deposits, Double taxation, EOI agreement, Exchange of information, Global, Offshore center, Offshore financial centers, Personal income tax, Standard error, Tax evasion, Treatment effect, WP

Publication Details

  • Pages:

    32

  • Volume:

    ---

  • DOI:

    ---

  • Issue:

    ---

  • Series:

    Working Paper No. 2019/286

  • Stock No:

    WPIEA2019286

  • ISBN:

    9781513519975

  • ISSN:

    1018-5941

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