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The End of Bank Secrecy? An Evaluation of the G20 Tax Haven Crackdown

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Author Info

  • Niels Johannesen

    (Department of Economics - University of Copenhagen - University of Copenhagen)

  • Gabriel Zucman

    (PSE - Paris-Jourdan Sciences Economiques - CNRS : UMR8545 - École des Hautes Études en Sciences Sociales (EHESS) - École des Ponts ParisTech (ENPC) - École normale supérieure [ENS] - Paris - Institut national de la recherche agronomique (INRA), EEP-PSE - Ecole d'Économie de Paris - Paris School of Economics - Ecole d'Économie de Paris)

Abstract

During the financial crisis, G20 countries compelled tax havens to sign bilateral treaties providing for exchange of bank information. Policymakers have celebrated this global initiative as the end of bank secrecy. Exploiting a unique panel dataset, our study is the first attempt to assess how the treaties affected bank deposits in tax havens. Rather than repatriating funds, our results suggest that tax evaders shifted deposits to havens not covered by a treaty with their home country. The crackdown thus caused a relocation of deposits at the benefit of the least compliant havens. We discuss the policy implications of these findings.

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Bibliographic Info

Paper provided by HAL in its series PSE Working Papers with number halshs-00665054.

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Date of creation: Feb 2012
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Handle: RePEc:hal:psewpa:halshs-00665054

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Keywords: Tax havens ; Tax evasion;

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  1. Dhammika Dharmapala, 2008. "What Problems and Opportunities are Created by Tax Havens?," Working Papers, Oxford University Centre for Business Taxation 0820, Oxford University Centre for Business Taxation.
  2. Mihir A. Desai & Dhammika Dharmapala, 2009. "Dividend Taxes and International Portfolio Choice," Working Papers, Oxford University Centre for Business Taxation 0911, Oxford University Centre for Business Taxation.
  3. Thomas Hemmelgarn & Gaetan Nicodeme, 2009. "Tax Co-ordination in Europe: Assessing the First Years of the EU-Savings Taxation Directive," Taxation Papers 18, Directorate General Taxation and Customs Union, European Commission.
  4. Katarzyna Bilicka & Clemens Fuest, 2012. "With which countries do tax havens share information?," RSCAS Working Papers 2012/06, European University Institute.
  5. Huizinga, Harry & Nicodeme, Gaetan, 2004. "Are international deposits tax-driven," Journal of Public Economics, Elsevier, vol. 88(6), pages 1093-1118, June.
  6. Bruce A. Blonigen & Ronald B. Davies, 2002. "Do Bilateral Tax Treaties Promote Foreign Direct Investment?," NBER Working Papers 8834, National Bureau of Economic Research, Inc.
  7. Dharmapala, Dhammika & Hines Jr., James R., 2009. "Which countries become tax havens?," Journal of Public Economics, Elsevier, vol. 93(9-10), pages 1058-1068, October.
  8. Desai, Mihir A. & Foley, C. Fritz & Hines, James Jr., 2006. "The demand for tax haven operations," Journal of Public Economics, Elsevier, vol. 90(3), pages 513-531, February.
  9. May Elsayyad & Kai A. Konrad, 2010. "Fighting Multiple Tax Havens," CESifo Working Paper Series 3195, CESifo Group Munich.
  10. Looney, Adam & Kroft, Kory & Chetty, Raj, 2009. "Salience and Taxation: Theory and Evidence," Scholarly Articles 9748525, Harvard University Department of Economics.
  11. Johannesen, Niels, 2014. "Tax evasion and Swiss bank deposits," Journal of Public Economics, Elsevier, vol. 111(C), pages 46-62.
  12. Bruce A. Blonigen & Lindsay Oldenski & Nicholas Sly, 2011. "Separating the Opposing Effects of Bilateral Tax Treaties," NBER Working Papers 17480, National Bureau of Economic Research, Inc.
  13. Henrik Jacobsen Kleven & Martin B. Knudsen & Claus Thustrup Kreiner & Søren Pedersen & Emmanuel Saez, 2011. "Unwilling or Unable to Cheat? Evidence From a Tax Audit Experiment in Denmark," Econometrica, Econometric Society, Econometric Society, vol. 79(3), pages 651-692, 05.
  14. James R. Hines, Jr. & Eric M. Rice, 1990. "Fiscal Paradise: Foreign Tax Havens and American Business," NBER Working Papers 3477, National Bureau of Economic Research, Inc.
  15. Wolfgang Eggert & Martin Kolmar, 2002. "Residence-Based Capital Taxation in a Small Open Economy: Why Information is Voluntarily Exchanged and Why it is Not," International Tax and Public Finance, Springer, Springer, vol. 9(4), pages 465-482, August.
  16. Philippe Bacchetta & María Espinosa, 2000. "Exchange-of-Information Clauses in International Tax Treaties," International Tax and Public Finance, Springer, Springer, vol. 7(3), pages 275-293, May.
  17. Kalok Chan & Vicentiu Covrig & Lilian Ng, 2005. "What Determines the Domestic Bias and Foreign Bias? Evidence from Mutual Fund Equity Allocations Worldwide," Journal of Finance, American Finance Association, American Finance Association, vol. 60(3), pages 1495-1534, 06.
  18. Henry Louie & Donald Rousslang, 2008. "Host-country governance, tax treaties and US direct investment abroad," International Tax and Public Finance, Springer, Springer, vol. 15(3), pages 256-273, June.
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Cited by:
  1. Katarzyna Bilicka & Clemens Fuest, 2012. "With which countries do tax havens share information?," RSCAS Working Papers 2012/06, European University Institute.
  2. Katarzyna Bilicka & Clemens Fuest, 2014. "With which countries do tax havens share information?," International Tax and Public Finance, Springer, Springer, vol. 21(2), pages 175-197, April.
  3. Jørgen Juel Andersen & Niels Johannesen & David Dreyer Lassen & Elena Paltseva, 2013. "Petro Rents, Political Institutions, and Hidden Wealth: Evidence from Bank Deposits in Tax Havens," EPRU Working Paper Series, Economic Policy Research Unit (EPRU), University of Copenhagen. Department of Economics 2013-03, Economic Policy Research Unit (EPRU), University of Copenhagen. Department of Economics.
  4. Baskaran, Thushyanthan & Lopes da Fonseca, Mariana, 2013. "The economics and empirics of tax competition: A survey," Center for European, Governance and Economic Development Research Discussion Papers 163, University of Goettingen, Department of Economics.
  5. Niels Johannesen, 2009. "Tax Evasion and Swiss Bank Deposits," EPRU Working Paper Series, Economic Policy Research Unit (EPRU), University of Copenhagen. Department of Economics 2010-05, Economic Policy Research Unit (EPRU), University of Copenhagen. Department of Economics, revised Sep 2010.
  6. repec:hal:wpaper:halshs-00565224 is not listed on IDEAS
  7. Kohler, Pierre, 2014. "Asset-Centred Redistributive Policies for Sustainable Development," MPRA Paper 55357, University Library of Munich, Germany.
  8. Langenmayr, Dominika, 2014. "Voluntary Disclosure of Evaded Taxes - Increasing Revenues, or Increasing Incentives to Evade?," Discussion Papers in Economics 21359, University of Munich, Department of Economics.

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