The exchange of taxpayer-specific information between national tax authorities has recently emerged as a key and controversial topic in international tax policy discussions, most notably with the OECD s harmful tax practices project and the EU s savings tax initiative. This paper analyses the effects of information exchange and withholding taxes, recognizing that countries which agree to exchange information do not forfeit the ability to levy withholding taxes, and also focusing in particular on the effects of innovative revenuesharing arrangements. Amongst the findings are that: (i) the transfer of withholding tax receipts to the residence country, as planned in the EU, has no effect on equilibrium tax rates, but acts purely as a lump sum transfer; (ii) in contrast, allocating some of the revenue from information exchange to the source country counter to usual practice (though no less so than the EU agreement) would have adverse strategic effects on total revenue; (iii) nevertheless, any withholding tax regime is Pareto dominated by
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Paper provided by Tilburg University, Center for Economic Research in its series Discussion Paper with number
54.
Find related papers by JEL classification: H77 - Public Economics - - State and Local Government; Intergovernmental Relations - - - Intergovernmental Relations; Federalism H87 - Public Economics - - Miscellaneous Issues - - - International Fiscal Issues; International Public Goods F42 - International Economics - - Macroeconomic Aspects of International Trade and Finance - - - International Policy Coordination and Transmission
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