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Cross-border tax evasion after the common reporting standard: Game over?

Author

Listed:
  • Casi, Elisa
  • Spengel, Christoph
  • Stage, Barbara M. B.

Abstract

We study the effect of the first global multilateral standard for the automatic exchange of information (AEOI), the so called Common Reporting Standard (CRS), on cross border tax evasion. Employing newly available bilateral data on cross-border deposits, we find that the CRS induced a reduction of 11.9% in cross-border deposits parked in traditional offshore countries for tax evasion purposes. Moreover, regardless of the 2,600 bilateral exchange relations created under the CRS, relocation is still a desirable option. More specifically, upon the CRS implementation at the domestic level, the United States, which so far did not commit to the CRS, seems to emerge as a potentially attractive location for cross-border tax evasion.

Suggested Citation

  • Casi, Elisa & Spengel, Christoph & Stage, Barbara M. B., 2019. "Cross-border tax evasion after the common reporting standard: Game over?," ZEW Discussion Papers 18-036, ZEW - Leibniz Centre for European Economic Research.
  • Handle: RePEc:zbw:zewdip:18036
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    References listed on IDEAS

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    1. Katarzyna Bilicka & Clemens Fuest, 2014. "With which countries do tax havens share information?," International Tax and Public Finance, Springer;International Institute of Public Finance, vol. 21(2), pages 175-197, April.
    2. Huizinga, Harry & Nicodeme, Gaetan, 2004. "Are international deposits tax-driven," Journal of Public Economics, Elsevier, vol. 88(6), pages 1093-1118, June.
    3. Michelle Hanlon & Edward L. Maydew & Jacob R. Thornock, 2015. "Taking the Long Way Home: U.S. Tax Evasion and Offshore Investments in U.S. Equity and Debt Markets," Journal of Finance, American Finance Association, vol. 70(1), pages 257-287, February.
    4. 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.
    5. Johannesen, Niels, 2014. "Tax evasion and Swiss bank deposits," Journal of Public Economics, Elsevier, vol. 111(C), pages 46-62.
    6. Casi, Elisa & Nenadic, Sara & Orlic, Mark Dinko & Spengel, Christoph, 2018. "A call to action: From evolution to revolution on the common reporting standard," ZEW Discussion Papers 18-035, ZEW - Leibniz Centre for European Economic Research.
    7. 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.
    8. Kleimeier, Stefanie & Sander, Harald & Heuchemer, Sylvia, 2013. "Financial crises and cross-border banking: New evidence," Journal of International Money and Finance, Elsevier, vol. 32(C), pages 884-915.
    9. Caruana-Galizia, Paul & Caruana-Galizia, Matthew, 2016. "Offshore financial activity and tax policy: evidence from a leaked data set," Journal of Public Policy, Cambridge University Press, vol. 36(3), pages 457-488, September.
    10. Allingham, Michael G. & Sandmo, Agnar, 1972. "Income tax evasion: a theoretical analysis," Journal of Public Economics, Elsevier, vol. 1(3-4), pages 323-338, November.
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    More about this item

    Keywords

    Tax Evasion; Automatic Exchange of Information; Offshore Countries; Cross-Border Deposits;

    JEL classification:

    • F42 - International Economics - - Macroeconomic Aspects of International Trade and Finance - - - International Policy Coordination and Transmission
    • G21 - Financial Economics - - Financial Institutions and Services - - - Banks; Other Depository Institutions; Micro Finance Institutions; Mortgages
    • H26 - Public Economics - - Taxation, Subsidies, and Revenue - - - Tax Evasion and Avoidance
    • H31 - Public Economics - - Fiscal Policies and Behavior of Economic Agents - - - Household

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