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From tax evasion to tax planning

Arnaud Bourgain, Patrice Pieretti and Skerdilajda Zanaj

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

Abstract: The aim of this paper is to analyze within a simple model how a re- moval of bank secrecy can impact tax revenues and banks' profitability assuming that offshore centers are able to offer sophisticated but legal or not easily detectable tax planning. Two alternative regimes are considered. A first in which there is strict bank secrecy and a second where there is international information exchange for tax purposes. We show in particular that sharing tax information with onshore coun- tries can be a dominant strategy for an OFC if there is enough scope for providing tax planning. Moreover, a partial reduction of tax lia- bilities can already prompt OFCs to voluntarily exchange relevant tax information. We also highlight a surprising result. The possible re- moval of bank secrecy may, under some conditions, reduce the onshore country's tax revenue.

Keywords: offshore centers; tax planning; tax evasion (search for similar items in EconPapers)
JEL-codes: F21 H26 H87 (search for similar items in EconPapers)
Date: 2012
New Economics Papers: this item is included in nep-acc, nep-cta and nep-iue
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Persistent link: https://EconPapers.repec.org/RePEc:luc:wpaper:12-16

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