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Revenue Sharing and Information Exchange under Non-Discriminatory Taxation

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  • Keen, M.
  • Ligthart, J.E.

    (Tilburg University, Center for Economic Research)

Abstract

The international exchange of tax information, and its merits compared to withholding taxes, is the central topic in current debates in international tax policy.The purpose of this paper is to characterize and compare the tax regimes that emerge with and without information exchange, under the assumption that countries are unable to differentiate between the taxes they apply to residents and non-residents.It focuses in particular on the role of asymmetries in country size (capturing a key feature of tax havens) and on the impact and potential desirability of schemes to share the revenue raised by withholding (as under the new EU savings tax arrangements) or (more innovatively) as a consequence of information exchange.It is shown that (irrespective of country size difference) Pareto efficiency requires that all revenue collected from nonresidents be transferred to the residence country which would require taking the EU practice even further from the norm, but is currently the norm in relation to information exchange.A withholding scheme with revenue fully reallocated in this way Pareto dominates information sharing, whatever the allocation under the latter. Comparing schemes in which there is no revenue sharing, however, shows that information exchange Pareto dominates simple withholding.

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Bibliographic Info

Paper provided by Tilburg University, Center for Economic Research in its series Discussion Paper with number 2005-69.

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Date of creation: 2005
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Handle: RePEc:dgr:kubcen:200569

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Web page: http://center.uvt.nl

Related research

Keywords: revenue sharing; tax information exchange; tax competition; international tax evasion; withholding taxes;

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References

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  1. Harry Huizinga & Søren Bo Nielsen, . "Withholding Taxes or Information Exchange: The Taxation of International Interest Flows," EPRU Working Paper Series 00-19, Economic Policy Research Unit (EPRU), University of Copenhagen. Department of Economics.
  2. Haufler, Andreas, 1996. "Tax Coordination with Different Preferences for Public Goods: Conflict or Harmony of Interest?," Munich Reprints in Economics 20392, University of Munich, Department of Economics.
  3. Bacchetta, P. & Paz Espinosa, M., 1992. "Information Sharing and Tax Competition Among Governments," UFAE and IAE Working Papers 173.92, Unitat de Fonaments de l'Anàlisi Econòmica (UAB) and Institut d'Anàlisi Econòmica (CSIC).
  4. Trandel, Gregory A., 1994. "Interstate commodity tax differentials and the distribution of residents," Journal of Public Economics, Elsevier, vol. 53(3), pages 435-457, March.
  5. Keen, Michael, 2001. "Preferential Regimes Can Make Tax Competition Less Harmful," National Tax Journal, National Tax Association, vol. 54(n. 4), pages 757-62, December.
  6. Keen, M. & Ligthart, J.E., 2004. "Information Sharing and International Taxation," Discussion Paper 2004-117, Tilburg University, Center for Economic Research.
  7. Kanbur, Ravi & Keen, Michael, 1993. "Jeux Sans Frontieres: Tax Competition and Tax Coordination When Countries Differ in Size," American Economic Review, American Economic Association, vol. 83(4), pages 877-92, September.
  8. Janeba, Eckhard & Peters, Wolfgang, 1999. "Tax Evasion, Tax Competition and the Gains from Nondiscrimination: The Case of Interest Taxation in Europe," Economic Journal, Royal Economic Society, vol. 109(452), pages 93-101, January.
  9. Wolfgang Eggert & Martin Kolmar, . "Information Sharing, Multiple Nash Equilibria, and Asymmetric Capital-Tax Competition," EPRU Working Paper Series 02-01, Economic Policy Research Unit (EPRU), University of Copenhagen. Department of Economics.
  10. Andreas Haufler, 1996. "Tax coordination with different preferences for public goods: Conflict or harmony of interest?," International Tax and Public Finance, Springer, vol. 3(1), pages 5-28, January.
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Citations

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Cited by:
  1. Ligthart, Jenny E., 2007. "Information sharing for consumption tax purposes: An empirical analysis," Information Economics and Policy, Elsevier, vol. 19(1), pages 24-42, March.
  2. Killian J. McCarthy & Frederik van Doorn & B. Unger, 2008. "Globalisation, Tax Competition and the Harmonisation of Corporate Tax Rates in Europe: A Case of Killing the Patient to Cure the Disease?," Working Papers 08-13, Utrecht School of Economics.
  3. Thomas Hemmelgarn & Gaëtan J.A. Nicodème, 2009. "Tax-Co-ordination in Europe: Assessing the First Years of the EU-Savings Taxation Directive," CESifo Working Paper Series 2675, CESifo Group Munich.
  4. PAOLINI, Dimitri & PISTONE, Pasquale & pulina, GIUSEPPE & ZAGLER, Martin, 2011. "Tax treaties and the allocation of taxing rights with developing countries," CORE Discussion Papers 2011042, Université catholique de Louvain, Center for Operations Research and Econometrics (CORE).

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