Tax information exchange with developing countries and tax havens

Julia Braun, Martin Zagler

Publication: Working/Discussion PaperWU Working Paper

Abstract

The exchange of tax information has received ample attention recently, due to a number of recent headlines on aggressive tax planning and tax evasion. Whilst both participating tax authorities will gain when foreign investments (FDI) are bilateral, we demonstrate that FDI receiving nations will lose in asymmetric situations. We solve a bargaining model that proves that tax information exchange will only happen voluntarily with compensation for this loss. We then present empirical evidence in a global panel and find that a tax information exchange agreement or a double tax treaty with information exchange is more likely when the capital importer is compensated through official development assistance. We finally demonstrate how the foreign account tax compliance act and similar international initiatives bias the bargaining outcome in favour of capital exporting countries.
Original languageEnglish
Publication statusPublished - 1 Oct 2015

Publication series

NameWU International Taxation Research Paper Series
No.2015-25

WU Working Paper Series

  • WU International Taxation Research Paper Series

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