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The BRICs and International Tax Governance: The Case of Automatic Exchange of Information

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  • Dries Lesage
  • Wouter Lips
  • Mattias Vermeiren

Abstract

This article investigates the BRICs’ involvement in the adoption of Automatic Exchange of Information (AEoI) by the G20 and the Organisation for Economic Cooperation and Development (OECD) as a major breakthrough in the global fight against tax evasion. Our main questions concern the BRICs’ willingness to accept AEoI, and their agreement to the Western-dominated OECD as its institutional forum. First, we examine the domestic drivers for BRICs’ participation, as their statist model of capitalism reveals strong disincentives to join this regime and the fact that the budgetary consequences of the global financial crisis were less severe than in Western states. We argue that their agreement on AEoI results more from their persistent balance-of-payments vulnerability to illicit capital than from fiscal weakness, while also discussing the possibilities for mock compliance. Second, we review the role of the non-reciprocal US foreign account tax compliance act (FATCA) in shaping the BRICs’ preference for a multilateral AEoI-regime centred around the OECD’s Common Reporting Standard (CRS). Last, we show that the BRICs’ acceptance of the OECD resulted from pragmatic interests and receiving ownership over the process, together with the absence of coercive mechanisms within the CRS-regime that could fundamentally undermine their sovereignty in this domain.

Suggested Citation

  • Dries Lesage & Wouter Lips & Mattias Vermeiren, 2020. "The BRICs and International Tax Governance: The Case of Automatic Exchange of Information," New Political Economy, Taylor & Francis Journals, vol. 25(5), pages 715-733, July.
    • Handle: RePEc:taf:cnpexx:v:25:y:2020:i:5:p:715-733
    DOI: 10.1080/13563467.2019.1584168
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    Cited by:

    1. Matti Ylönen & Wolfgang Drechsle & Veiko Lember, . "Online incorporation platforms in Estonia and beyond: How administrative spillover effects hamper international taxation," UNCTAD Transnational Corporations Journal, United Nations Conference on Trade and Development.
    2. Neba Bhalla & Rakesh Kumar Sharma & Inderjit Kaur, 2022. "Effect of Tax Knowledge and Technological Shift in Tax System on Business Performance: A PLS-SEM Analysis," Sustainability, MDPI, vol. 14(16), pages 1-18, August.
    3. Petr Janský & Markus Meinzer & Miroslav Palanský, 2022. "Is Panama really your tax haven? Secrecy jurisdictions and the countries they harm," Regulation & Governance, John Wiley & Sons, vol. 16(3), pages 673-704, July.
    4. Matti Ylönen & Ringa Raudla & Milan Babic, 2024. "From tax havens to cryptocurrencies: secrecy-seeking capital in the global economy," Review of International Political Economy, Taylor & Francis Journals, vol. 31(2), pages 563-588, March.
    5. Neba Bhalla & Rakesh Kumar Sharma & Inderjit Kaur, 2023. "Effect of Goods and Service Tax System on Business Performance of Micro, Small and Medium Enterprises," SAGE Open, , vol. 13(2), pages 21582440231, June.

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