IDEAS home Printed from https://ideas.repec.org/p/ces/ceswps/_5750.html
   My bibliography  Save this paper

Voluntary Disclosure Schemes for Offshore Tax Evasion: An Analysis

Author

Listed:
  • Matthew Gould
  • Matthew Rablen

Abstract

In recent years tax authorities worldwide have implemented voluntary disclosure schemes to recover tax on offshore investments. Such Schemes are characterized by the acquisition of non-audit information on offshore holdings, and a subsequent opportunity for affected taxpayers to make a voluntary disclosure. Accepted disclosures are subject to a discounted .ne rate, but verified under-disclosure attracts a higher penalty. We characterize the optimal Scheme and show that an optimal Scheme can generate a Pareto-improvement over the optimal auditing equilibrium without a Scheme, and can stimulate legitimate offshore investment activity. We show when a tax authority optimally gives incentives for truthful disclosure, and when it does not. The analysis yields practical design insights for policymakers.

Suggested Citation

  • Matthew Gould & Matthew Rablen, 2016. "Voluntary Disclosure Schemes for Offshore Tax Evasion: An Analysis," CESifo Working Paper Series 5750, CESifo Group Munich.
  • Handle: RePEc:ces:ceswps:_5750
    as

    Download full text from publisher

    File URL: http://www.cesifo-group.de/DocDL/cesifo1_wp5750.pdf
    Download Restriction: no

    References listed on IDEAS

    as
    1. Malik, Arun S. & Schwab, Robert M., 1991. "The economics of tax amnesties," Journal of Public Economics, Elsevier, vol. 46(1), pages 29-49, October.
    2. Macho-Stadler, Ines & Olivella, Pau & Perez-Castrillo, David, 1999. " Tax Amnesties in a Dynamic Model of Tax Evasion," Journal of Public Economic Theory, Association for Public Economic Theory, vol. 1(4), pages 439-463.
    3. Gary S. Becker, 1974. "Crime and Punishment: An Economic Approach," NBER Chapters,in: Essays in the Economics of Crime and Punishment, pages 1-54 National Bureau of Economic Research, Inc.
    4. Nahum D. Melumad & Dilip Mookherjee, 1989. "Delegation as Commitment: The Case of Income Tax Audits," RAND Journal of Economics, The RAND Corporation, vol. 20(2), pages 139-163, Summer.
    5. Gravelle, Jane G., 2009. "Tax Havens: International Tax Avoidance and Evasion," National Tax Journal, National Tax Association;National Tax Journal, vol. 62(4), pages 727-753, December.
    6. Bordignon, Massimo, 1993. "A fairness approach to income tax evasion," Journal of Public Economics, Elsevier, vol. 52(3), pages 345-362, October.
    7. Raj Chetty & Adam Looney & Kory Kroft, 2009. "Salience and Taxation: Theory and Evidence," American Economic Review, American Economic Association, vol. 99(4), pages 1145-1177, September.
    8. Langenmayr, Dominika, 2017. "Voluntary disclosure of evaded taxes — Increasing revenue, or increasing incentives to evade?," Journal of Public Economics, Elsevier, vol. 151(C), pages 110-125.
    9. Niels Johannesen & Gabriel Zucman, 2014. "The End of Bank Secrecy? An Evaluation of the G20 Tax Haven Crackdown," American Economic Journal: Economic Policy, American Economic Association, vol. 6(1), pages 65-91, February.
    10. Alm, James & Beck, William, 1993. "Tax Amnesties and Compliance in the Long Run: A Time Series Analysis," National Tax Journal, National Tax Association, vol. 46(1), pages 53-60, March.
    11. Sascha Hokamp & Michael Pickhardt, 2010. "Income Tax Evasion in a Society of Heterogeneous Agents - Evidence from an Agent-based Model," International Economic Journal, Taylor & Francis Journals, vol. 24(4), pages 541-553.
    12. Glen Ueng, K. L. & Yang, C. C., 2001. "Plea bargaining with the IRS: extensions and further results," Journal of Public Economics, Elsevier, vol. 81(1), pages 83-98, July.
    13. Hashimzade, Nigar & Myles, Gareth D. & Page, Frank & Rablen, Matthew D., 2014. "Social networks and occupational choice: The endogenous formation of attitudes and beliefs about tax compliance," Journal of Economic Psychology, Elsevier, vol. 40(C), pages 134-146.
    14. Yosef Mealem & Yossef Tobol & Gideon Yaniv, 2010. "Whistle-blowers as a Deterrent to Tax Evasion," Public Finance Review, , vol. 38(3), pages 306-320, May.
    15. Scotchmer, Suzanne, 1987. "Audit Classes and Tax Enforcement Policy," American Economic Review, American Economic Association, vol. 77(2), pages 229-233, May.
    16. Graetz, Michael J & Reinganum, Jennifer F & Wilde, Louis L, 1986. "The Tax Compliance Game: Toward an Interactive Theory of Law Enforcement," Journal of Law, Economics, and Organization, Oxford University Press, vol. 2(1), pages 1-32, Spring.
    17. Gabriel Zucman, 2013. "The Missing Wealth of Nations: Are Europe and the U.S. net Debtors or net Creditors?," The Quarterly Journal of Economics, Oxford University Press, vol. 128(3), pages 1321-1364.
    18. Kolm, Serge-Christophe, 1973. "A note on optimum tax evasion," Journal of Public Economics, Elsevier, vol. 2(3), pages 265-270, July.
    19. Franzoni, Luigi Alberto, 2000. "Amnesties, Settlements and Optimal Tax Enforcement," Economica, London School of Economics and Political Science, vol. 67(266), pages 153-176, May.
    20. Matthew D. Rablen, 2014. "Audit Probability versus Effectiveness: The Beckerian Approach Revisited," Journal of Public Economic Theory, Association for Public Economic Theory, vol. 16(2), pages 322-342, April.
    21. Eberhard Feess & Markus Walzl, 2005. "Optimal Self-Reporting Schemes with Multiple Stages and Option Values," International Tax and Public Finance, Springer;International Institute of Public Finance, vol. 12(3), pages 265-279, May.
    22. Alm, James & McKee, Michael J. & Beck, William, 1990. "Amazing Grace: Tax Amnesties and Compliance," National Tax Journal, National Tax Association, vol. 43(1), pages 23-37, March.
    23. Kaplow, Louis & Shavell, Steven, 1994. "Optimal Law Enforcement with Self-Reporting of Behavior," Journal of Political Economy, University of Chicago Press, vol. 102(3), pages 583-606, June.
    24. Brian Erard & Jonathan S. Feinstein, 1994. "Honesty and Evasion in the Tax Compliance Game," RAND Journal of Economics, The RAND Corporation, vol. 25(1), pages 1-19, Spring.
    25. Stella, Peter, 1991. "An economic analysis of tax amnesties," Journal of Public Economics, Elsevier, vol. 46(3), pages 383-400, December.
    26. Yaniv, Gideon, 2001. " Revenge, Tax Informing, and the Optimal Bounty," Journal of Public Economic Theory, Association for Public Economic Theory, vol. 3(2), pages 225-233.
    27. Alm, James & McKee, Michael J. & Beck, William, 1990. "Amazing Grace: Tax Amnesties and Compliance," National Tax Journal, National Tax Association;National Tax Journal, vol. 43(1), pages 23-37, March.
    28. Andreoni, James, 1991. "The desirability of a permanent tax amnesty," Journal of Public Economics, Elsevier, vol. 45(2), pages 143-159, July.
    Full references (including those not matched with items on IDEAS)

    More about this item

    Keywords

    voluntary disclosure; offshore tax evasion; tax amnesty; third-party information;

    JEL classification:

    • H26 - Public Economics - - Taxation, Subsidies, and Revenue - - - Tax Evasion and Avoidance
    • D85 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Network Formation

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:ces:ceswps:_5750. See general information about how to correct material in RePEc.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Klaus Wohlrabe). General contact details of provider: http://edirc.repec.org/data/cesifde.html .

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service hosted by the Research Division of the Federal Reserve Bank of St. Louis . RePEc uses bibliographic data supplied by the respective publishers.