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Does Global Financial Transparency Improve Tax Compliance in Developing Countries?

Author

Listed:
  • Niels Johannesen
  • Lauge Larsen
  • Nadine Riedel

Abstract

In a coordinated effort to curb tax evasion, governments systematically exchange information about bank accounts with foreign owners. We study the compliance effects of the policy in the context of South Africa using information reports on 1 million foreign bank accounts linked to income and audit data. We find that self-reported foreign income increased sharply and persistently at the onset of information exchange, but remained much below the true foreign income implied by the information reports. We explain the partial compliance response by showing that, contrary to standard theory of third-party reporting, the detection risk associated with non-compliance was modest.

Suggested Citation

  • Niels Johannesen & Lauge Larsen & Nadine Riedel, 2026. "Does Global Financial Transparency Improve Tax Compliance in Developing Countries?," CESifo Working Paper Series 12747, CESifo.
    • Handle: RePEc:ces:ceswps:_12747
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    Keywords

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    JEL classification:

    • H26 - Public Economics - - Taxation, Subsidies, and Revenue - - - Tax Evasion and Avoidance
    • H31 - Public Economics - - Fiscal Policies and Behavior of Economic Agents - - - Household
    • H87 - Public Economics - - Miscellaneous Issues - - - International Fiscal Issues; International Public Goods

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