Tax havens compliance with international standards: a temporal perspective

Patrice Pierreti (), Giuseppe Pulina and Skerdilajda Zanaj
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Patrice Pierreti: CREA, Université du Luxembourg

DEM Discussion Paper Series from Department of Economics at the University of Luxembourg

Abstract: This paper contributes to the debate centring on the fight against aggressive tax avoidance practices through the release of international standards. We develop a model in which identical tax havens decide upon their compliance date while competing for onshore capital. The timing of these decisions depends on the effects of two opposing forces. One force is linked to the tax sensitivity of international capital and the other to the reaction of nearby potential capital. When the former force dominates, asynchronous compliance arises, which occurs even with identical tax havens and perfect information. However, when the latter force dominates, tax havens comply simultaneously. In any case, the loss of the tax base within the onshore region is minimized when compliance is simultaneous and occurs at the earliest possible date. Surprisingly, when the adoption of new standards does not severely reduce the potential supply of capital and onshore capital is sufficiently tax sensitive, the compliance of a lone tax haven does not decrease the loss of tax base relative to the non-compliance of all the havens.

Keywords: Tax Havens; International standards; Compliance; Timing (search for similar items in EconPapers)
JEL-codes: F21 F23 H23 H25 H26 (search for similar items in EconPapers)
Date: 2016
New Economics Papers: this item is included in nep-acc, nep-pbe and nep-pub
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (2)

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https://hdl.handle.net/10993/31304 (application/pdf)

Related works:
Journal Article: Tax havens compliance with international standards: A temporal perspective (2020)
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Persistent link: https://EconPapers.repec.org/RePEc:luc:wpaper:16-07

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