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Coordination and the fight against tax havens

Author

Listed:
  • Konrad, Kai A.
  • Stolper, Tim B. M.

Abstract

The success or failure of the fight against tax havens is the outcome of a many player coordination game between a tax haven and its potential investors. Key determinants are the costly international pressure and the size of the haven country's revenue pool. The latter is determined endogenously by the decisions of many individual investors. Our analysis suggests a non-standard market model that explains why haven countries would ever comply with international standards of transparency despite the large empirically observable returns in the tax haven business. It also alludes to why service fees in tax havens can be positive despite a competitive financial market with multiple tax havens. Furthermore, we identify a trade-off between the fight against tax havens and high tax rates. Finally, low fines for disclosed offshore tax evasion, e.g. in special programs for tax evaders who voluntarily report their offshore wealth, strengthen haven countries against international pressure. (C) 2016 Elsevier B.V. All rights reserved.

Suggested Citation

  • Konrad, Kai A. & Stolper, Tim B. M., 2016. "Coordination and the fight against tax havens," Munich Reprints in Economics 43481, University of Munich, Department of Economics.
    • Handle: RePEc:lmu:muenar:43481
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    Cited by:

    1. Menkhoff, Lukas & Miethe, Jakob, 2019. "Tax evasion in new disguise? Examining tax havens' international bank deposits," EconStor Open Access Articles and Book Chapters, ZBW - Leibniz Information Centre for Economics, vol. 176, pages 53-78.
    2. Fernando, Garcia Alvarado & Antoine, Mandel, 2022. "The network structure of global tax evasion evidence from the Panama papers," Journal of Economic Behavior & Organization, Elsevier, vol. 197(C), pages 660-684.
    3. Collin,Matthew Edward, 2023. "The Impact of Tax Blacklisting," Policy Research Working Paper Series 10435, The World Bank.
    4. Hoang Ha Nguyen Thi & Alfons Weichenrieder, 2023. "Tax Haven Welfare and the Crackdown on Secrecy: Evidence from Night Light Emissions," CESifo Working Paper Series 10721, CESifo.
    5. Katarzyna Bilicka & André Seidel, 2020. "Profit shifting and corruption," International Tax and Public Finance, Springer;International Institute of Public Finance, vol. 27(5), pages 1051-1080, October.
    6. 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.
    7. Matthew Gould & Matthew D. Rablen, 2020. "Voluntary disclosure schemes for offshore tax evasion," International Tax and Public Finance, Springer;International Institute of Public Finance, vol. 27(4), pages 805-831, August.
    8. Pieretti, Patrice & Pulina, Giuseppe, 2024. "A game-theoretic analysis of international tax compliance," Economic Modelling, Elsevier, vol. 134(C).
    9. Egger, Peter H. & Strecker, Nora M. & Zoller-Rydzek, Benedikt, 2020. "Estimating bargaining-related tax advantages of multinational firms," Journal of International Economics, Elsevier, vol. 122(C).
    10. Pier Luigi Sacco & Alex Arenas & Manlio De Domenico, 2022. "The resilience of the multirelational structure of geopolitical treaties is critically linked to past colonial world order and offshore fiscal havens," Papers 2203.00618, arXiv.org.
    11. Thomas A. Gresik & Kai A. Konrad, 2017. "Tax Havens, Accounting Experts, and Fee-Setting Rules," CESifo Working Paper Series 6774, CESifo.
    12. Rui Pan & Dao‐Zhi Zeng, 2023. "The effects of trade liberalization on tax avoidance," International Journal of Economic Theory, The International Society for Economic Theory, vol. 19(4), pages 898-932, December.
    13. Marcelo Arbex & Sidney Caetano, 2016. "Welfare Implications of AEoI," Working Papers 1608, University of Windsor, Department of Economics.

    More about this item

    JEL classification:

    • Z00 - Other Special Topics - - General - - - General
    • Z10 - Other Special Topics - - Cultural Economics - - - General
    • Z11 - Other Special Topics - - Cultural Economics - - - Economics of the Arts and Literature

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