Voluntary Disclosure Schemes for Offshore Tax Evasion: An Analysis

Matthew Gould and Matthew Rablen

No 5750, CESifo Working Paper Series from CESifo

Abstract: In recent years tax authorities worldwide have implemented voluntary disclosure schemes to recover tax on offshore investments. Such Schemes are characterized by the acquisition of non-audit information on offshore holdings, and a subsequent opportunity for affected taxpayers to make a voluntary disclosure. Accepted disclosures are subject to a discounted .ne rate, but verified under-disclosure attracts a higher penalty. We characterize the optimal Scheme and show that an optimal Scheme can generate a Pareto-improvement over the optimal auditing equilibrium without a Scheme, and can stimulate legitimate offshore investment activity. We show when a tax authority optimally gives incentives for truthful disclosure, and when it does not. The analysis yields practical design insights for policymakers.

Keywords: voluntary disclosure; offshore tax evasion; tax amnesty; third-party information (search for similar items in EconPapers)
JEL-codes: D85 H26 (search for similar items in EconPapers)
Date: 2016
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