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Secrecy jurisdictions

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  • Guttorm Schjelderup

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Abstract

This paper surveys tax haven legislation and links the literature on tax havens to the literature on asymmetric information. I argue that the core aim of tax haven legislation is to create private information (secrecy) for the users of tax havens. This leads to moral hazard and transaction costs in non-havens. The business model of tax havens is illustrated by using Mauritius and Jersey as case studies. I also provide several real-world examples of how secrecy jurisdictions lead to inefficient market outcomes and breach of regulations in non-haven countries. Both developed and developing countries are harmed, but the consequences seem most detrimental to developing countries. Copyright Springer Science+Business Media New York 2016

Suggested Citation

  • Guttorm Schjelderup, 2016. "Secrecy jurisdictions," International Tax and Public Finance, Springer;International Institute of Public Finance, vol. 23(1), pages 168-189, February.
  • Handle: RePEc:kap:itaxpf:v:23:y:2016:i:1:p:168-189 DOI: 10.1007/s10797-015-9350-7
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    References listed on IDEAS

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    Citations

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    Cited by:

    1. Dharmapala, Dhammika, 2016. "Cross-border tax evasion under a unilateral FATCA regime," Journal of Public Economics, Elsevier, vol. 141(C), pages 29-37.
    2. Ivar Kolstad, 2017. "Protected tax havens: Cornering the market through international reform?," CMI Working Papers 7, CMI (Chr. Michelsen Institute), Bergen, Norway.
    3. Weichenrieder, Alfons J., 2016. "Panama & Co: Implikationen für die Steuerpolitik," SAFE Policy Letters 52, Goethe University Frankfurt, Research Center SAFE - Sustainable Architecture for Finance in Europe.

    More about this item

    Keywords

    Tax havens; Secrecy; Private information; Moral hazard; H25; F23; O1;

    JEL classification:

    • F23 - International Economics - - International Factor Movements and International Business - - - Multinational Firms; International Business
    • H25 - Public Economics - - Taxation, Subsidies, and Revenue - - - Business Taxes and Subsidies
    • O10 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - General

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