Breaking the Boundaries in the Digital Age: Open Banking and Tax Evasion

Ngoc Thang Dang, Stelios Andreadakis (), Pamela Nika and Monomita Nandy
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Ngoc Thang Dang: Brunel Business School, Brunel University, London UB8 3PH, UK
Stelios Andreadakis: Brunel Law School, Brunel University, London UB8 3PH, UK
Pamela Nika: Brunel Law School, Brunel University, London UB8 3PH, UK
Monomita Nandy: Brunel Business School, Brunel University, London UB8 3PH, UK

IJFS, 2024, vol. 12, issue 3, 1-27

Abstract: In this paper, we examine the relationship between open banking and tax evasion. As the open banking literature is still evolving, we try to systematically analyze the literature on conventional banking and tax evasion and then extend the discussion in the context of open banking. The popularity of open baking recently raises a question about its relationship with tax evasion. Digital banking and digital taxation contributed positively to mitigating tax evasion in the context of conventional banking. However, in open banking, the customers can decide to what extent they will share any transaction-related data with their bank, while they can also choose to complete direct transactions with third parties. This creates a new challenge in relation to the mitigation of tax evasion, which is the focus of this paper. Due to lack of granular empirical data, we conduct a systematic literature review and a bibliometric analysis to track the development of the relevant academic debates and identify the arguments that have been presented in relation to this topic. This approach is recognized as well suited for emerging topics in finance research, particularly when data are scarce, as evidenced by studies on COVID-19 and biodiversity. We find that the gaps of the current regulatory framework, at both the national and supranational level, have created challenges and uncertainties at multiple levels. Nonetheless, the findings of the study suggest future research directions and offer valuable guidelines for regulators in utilizing open banking.

Keywords: open banking; tax evasion; open application programming interfaces (APIs); third-party service provider; conventional banking (search for similar items in EconPapers)
JEL-codes: F2 F3 F41 F42 G1 G2 G3 (search for similar items in EconPapers)
Date: 2024
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