Tax Morale and International Tax Evasion

David Kemme (), Bhavik Parikh and Tanja Steigner

Journal of World Business, 2020, vol. 55, issue 3

Abstract: Low tax morale is associated with domestic tax evasion. We find evidence of cross-border equity flows designed to evade taxes in low tax morale countries. Using Foreign Portfolio Equity Investment (FPI) flows into 21 OECD countries from 138 source countries and an index of tax morale from the World Value Survey (WVS), we show that individuals in countries with low tax morale engage in tax evasion via roundtripping through tax havens. This allows them to benefit from differential taxes applied to foreign investors vis-a-vis domestic investors. Our results remain robust to various measures of tax morale and distinct subsamples.

Keywords: Tax morale; Foreign portfolio investments; Roundtripping; Tax havens; Tax evasion (search for similar items in EconPapers)
JEL-codes: G15 H26 (search for similar items in EconPapers)
Date: 2020
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (26)

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DOI: 10.1016/j.jwb.2019.101052

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