Does Global Financial Transparency Improve Tax Compliance in Developing Countries?

Niels Johannesen, Lauge Larsen and Nadine Riedel

No 12747, CESifo Working Paper Series from CESifo

Abstract: In a coordinated effort to curb tax evasion, governments systematically exchange information about bank accounts with foreign owners. We study the compliance effects of the policy in the context of South Africa using information reports on 1 million foreign bank accounts linked to income and audit data. We find that self-reported foreign income increased sharply and persistently at the onset of information exchange, but remained much below the true foreign income implied by the information reports. We explain the partial compliance response by showing that, contrary to standard theory of third-party reporting, the detection risk associated with non-compliance was modest.

Keywords: tax compliance; tax evasion; tax enforcement; international taxation; information exchange (search for similar items in EconPapers)
JEL-codes: H26 H31 H87 (search for similar items in EconPapers)
Date: 2026
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