What do external statistics tell us about undeclared assets held abroad and tax evasion?

Valeria Pellegrini (), Alessandra Sanelli () and Enrico Tosti
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Valeria Pellegrini: Banca d'Italia
Alessandra Sanelli: Banca d'Italia

No 367, Questioni di Economia e Finanza (Occasional Papers) from Bank of Italy, Economic Research and International Relations Area

Abstract: The analysis of international investment position and balance of payments statistics suggests that foreign assets held abroad are greatly underestimated. This paper has three main goals. First, it examines the role played by tax havens in tax evasion. Second, it estimates unreported capital to range globally between $6 trillion and $7 trillion at end-2013, on the basis of mirror statistics on portfolio securities and on cross-border deposits of non-banks. Third, it estimates the portion of tax evasion connected to the underreporting of foreign assets to range between $20 billion and $42 billion a year over the period 2001-2013 for capital income tax, and between $2.1 trillion and $2.8 trillion at end-2013 for personal income tax. The estimate for personal income tax is based on the assumption that the entire stock of unreported capital outstanding at end-2013 was made up of income that had escaped income tax. Finally, the paper gives a critical assessment of the strengths and weaknesses of the recent policy responses to international tax evasion.

Keywords: tax evasion; tax haven; international investment; foreign investment; multinational firm; offshore; foreign assets; under-reporting (search for similar items in EconPapers)
JEL-codes: F21 F23 G15 H26 (search for similar items in EconPapers)
Date: 2016-11
New Economics Papers: this item is included in nep-acc, nep-iue and nep-pbe
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Citations: View citations in EconPapers (31)

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Persistent link: https://EconPapers.repec.org/RePEc:bdi:opques:qef_367_16

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