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What do external statistics tell us about undeclared assets held abroad and tax evasion?

Author

Listed:
  • Valeria Pellegrini

    () (Banca d'Italia)

  • Alessandra Sanelli

    () (Banca d'Italia)

  • Enrico Tosti

    () (Banca d'Italia)

Abstract

The analysis of international investment position and balance of payments statistics suggests that foreign assets held abroad are greatly underestimated. This paper has three main goals. First, it examines the role played by tax havens in tax evasion. Second, it estimates unreported capital to range globally between $6 trillion and $7 trillion at end-2013, on the basis of mirror statistics on portfolio securities and on cross-border deposits of non-banks. Third, it estimates the portion of tax evasion connected to the underreporting of foreign assets to range between $20 billion and $42 billion a year over the period 2001-2013 for capital income tax, and between $2.1 trillion and $2.8 trillion at end-2013 for personal income tax. The estimate for personal income tax is based on the assumption that the entire stock of unreported capital outstanding at end-2013 was made up of income that had escaped income tax. Finally, the paper gives a critical assessment of the strengths and weaknesses of the recent policy responses to international tax evasion.

Suggested Citation

  • Valeria Pellegrini & Alessandra Sanelli & Enrico Tosti, 2016. "What do external statistics tell us about undeclared assets held abroad and tax evasion?," Questioni di Economia e Finanza (Occasional Papers) 367, Bank of Italy, Economic Research and International Relations Area.
  • Handle: RePEc:bdi:opques:qef_367_16
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    File URL: http://www.bancaditalia.it/pubblicazioni/qef/2016-0367/QEF_367.pdf
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    Citations

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    Cited by:

    1. Annette Alstadsæter & Niels Johannesen & Gabriel Zucman, 2019. "Tax Evasion and Inequality," American Economic Review, American Economic Association, vol. 109(6), pages 2073-2103, June.
    2. Menkhoff, Lukas & Miethe, Jakob, 2019. "Tax evasion in new disguise? Examining tax havens' international bank deposits," Journal of Public Economics, Elsevier, vol. 176(C), pages 53-78.
    3. Paolo Acciari & Salvatore Morelli, 2020. "Wealth Transfers and Net Wealth at Death: Evidence from the Italian Inheritance Tax Records 1995–2016," NBER Chapters, in: Measuring Distribution and Mobility of Income and Wealth, National Bureau of Economic Research, Inc.
    4. Alstadsæter, Annette & Johannesen, Niels & Zucman, Gabriel, 2018. "Who owns the wealth in tax havens? Macro evidence and implications for global inequality," Journal of Public Economics, Elsevier, vol. 162(C), pages 89-100.
    5. -, 2020. "Panorama Fiscal de América Latina y el Caribe, 2020: la política fiscal ante la crisis derivada de la pandemia de la enfermedad por coronavirus (COVID-19)," Libros y Documentos Institucionales, Naciones Unidas Comisión Económica para América Latina y el Caribe (CEPAL), number 45730 edited by Cepal, March.
    6. Gabriel Zucman, 2019. "Global Wealth Inequality," NBER Working Papers 25462, National Bureau of Economic Research, Inc.
    7. Ludger Schuknecht & Vincent Siegerink, 2021. "The Political Economy of the International Tax Transparency Agenda in the G20/OECD Context," CESifo Working Paper Series 8813, CESifo.
    8. Jakob Miethe & Helge Niesytka, 2016. "Tax Evasion and the Impact of International Regulation: A Summary of Empirical Results," DIW Roundup: Politik im Fokus 104, DIW Berlin, German Institute for Economic Research.
    9. Valerio Della Corte & Stefano Federico & Enrico Tosti, 2018. "Unwinding external stock imbalances? The case of Italy’s net international investment position," Questioni di Economia e Finanza (Occasional Papers) 446, Bank of Italy, Economic Research and International Relations Area.
    10. Darina Saxunova & Rozalia Sulikova & Rita Szarkova, 2017. "Tax Management Hierarchy – Tax Fraud and a Fraudster," MIC 2017: Managing the Global Economy; Proceedings of the Joint International Conference, Monastier di Treviso, Italy, 24–27 May 2017,, University of Primorska Press.
    11. David Bradbury & Pierce O’Reilly, 2018. "Inclusive fiscal reform: ensuring fairness and transparency in the international tax system," International Tax and Public Finance, Springer;International Institute of Public Finance, vol. 25(6), pages 1434-1448, December.

    More about this item

    Keywords

    tax evasion; tax haven; international investment; foreign investment; multinational firm; offshore; foreign assets; under-reporting;
    All these keywords.

    JEL classification:

    • H26 - Public Economics - - Taxation, Subsidies, and Revenue - - - Tax Evasion and Avoidance
    • F21 - International Economics - - International Factor Movements and International Business - - - International Investment; Long-Term Capital Movements
    • F23 - International Economics - - International Factor Movements and International Business - - - Multinational Firms; International Business
    • G15 - Financial Economics - - General Financial Markets - - - International Financial Markets

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