Abstract
With automatic exchange of tax information among countries now common, tax evaders have had to find new ways to hide their offshore holdings. One such way is citizenship-by-investment, which offers foreigners a new passport for a local investment or a fixed fee. We show analytically that high-income individuals acquire a new citizenship to lower the probability that their tax evasion is detected through information exchange. Using data on cross-border bank deposits, we find that deposits in tax havens increase after a country starts offering a citizenship-by-investment program, providing indirect evidence that tax evaders use these programs.
Original language | English |
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Article number | 104865 |
Journal | Journal of Public Economics |
Volume | 221 |
DOIs | |
Publication status | Published - May 2023 |
Bibliographical note
Publisher Copyright:© 2023 The Author(s)
Keywords
- Citizenship-by-investment programs
- Tax evasion
- Tax havens