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Tax Havens, Accounting Experts, and Fee-Setting Rules

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  • Thomas A. Gresik
  • Kai A. Konrad

Abstract

Tax havens differ in the specific tax planning arrangements multinational firms can use to reduce their tax liabilities. Given the complexity and cost associated with identifying the most effective tax haven to use, an accounting firm can act as an intermediary between tax havens and multinational corporations. We analyze a model with horizontally differentiated multinationals and tax havens to study the role accounting firm intermediation has on tax haven prices, multinational tax planning choices, accounting firm profits, and tax revenues. In equilibrium, uniform accounting firm fees generate higher accounting firm profit, less tax avoidance, and higher tax revenues than either full price discrimination or haven-specific fees.

Suggested Citation

  • Thomas A. Gresik & Kai A. Konrad, 2017. "Tax Havens, Accounting Experts, and Fee-Setting Rules," CESifo Working Paper Series 6774, CESifo.
  • Handle: RePEc:ces:ceswps:_6774
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    More about this item

    Keywords

    tax haven; accounting firm; horizontal differentiation; double marginalization; fee-setting rules;
    All these keywords.

    JEL classification:

    • M41 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Accounting - - - Accounting
    • H26 - Public Economics - - Taxation, Subsidies, and Revenue - - - Tax Evasion and Avoidance
    • H73 - Public Economics - - State and Local Government; Intergovernmental Relations - - - Interjurisdictional Differentials and Their Effects
    • F38 - International Economics - - International Finance - - - International Financial Policy: Financial Transactions Tax; Capital Controls

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