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Exchange-of-Information Clauses in International Tax Treaties

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  • Philippe Bacchetta
  • María Espinosa

Abstract

This paper examines bilateral double taxation treaties, with an emphasis on information exchange among tax authorities. A major objective is to understand which countries are more likely to sign a tax-relief treaty and when information-exchange clauses will be added to a treaty. A simple model with two asymmetric countries and repeated interactions among governments is used. The paper shows that no information exchange clause may be added to a tax treaty when there is a reciprocity requirement, when there is a high cost of negotiation, when there is a cost of providing information, or with one-way capital flows. It is also shown that an information clause increases the gains from a tax relief treaty, but may make it less sustainable. Copyright Kluwer Academic Publishers 2000

Suggested Citation

  • Philippe Bacchetta & María Espinosa, 2000. "Exchange-of-Information Clauses in International Tax Treaties," International Tax and Public Finance, Springer;International Institute of Public Finance, vol. 7(3), pages 275-293, May.
    • Handle: RePEc:kap:itaxpf:v:7:y:2000:i:3:p:275-293
    DOI: 10.1023/A:1008753629558
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