Dynamic Identification of Sovereign Facilitators in International Corporate Tax Avoidance

Henk Kox and Arjan M. Lejour

No 13065, CESifo Working Paper Series from CESifo

Abstract: International corporate tax avoidance is facilitated by sovereign jurisdictions that function as tax havens, financial secrecy havens, or offshore financial centres. The active policies of these jurisdictions potentially erode the tax basis of other countries, create an uneven playing field for domestic and multinational firms, and undermine international fiscal cooperation. However, the definition and identification of such sovereign facilitators of tax avoidance is --in both policy documents and academic literature-- surrounded by a lack of agreement. Traditional lists of tax havens are seldom updated, have no time variance, and often ignore tax havens among rich countries. This paper proposes the Joint Dynamic Identification Framework (JDIF), a standardised method that simultaneously identifies tax havens, financial secrecy havens, and offshore financial centres. Using only five statistical indicators makes it easy to apply this identification tool. We present a full-fledged proof-of-concept, covering the period 2001-2022 and more than 200 jurisdictions. The JDIF method shows that the pattern of border-crossing corporate tax avoidance is highly dynamic. Individual jurisdictions sometimes change their specialisation in tax avoidance networks. The JDIF method reveals shifting patterns between groups of tax-avoidance-facilitating jurisdictions and generates data that can be used in network analysis. Several robustness tests show the validity of our findings and demonstrate its policy relevance.

Keywords: identifying sovereign facilitators; corporate tax avoidance; policy tool; tax havens; financial secrecy havens; offshore financial centres; network analysis (search for similar items in EconPapers)
JEL-codes: C82 E62 F23 F42 G32 H32 (search for similar items in EconPapers)
Date: 2026
New Economics Papers: this item is included in nep-pbe
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