MPFD Working Paper on Hide-and-seek: Can tax treaties reveal offshore wealth?
In response to offshore tax evasion, governments have introduced new tax treaties to facilitate the exchange of financial account information between jurisdictions, including traditional tax havens. Based on international banking statistics, I examine whether these treaties have had a material impact on offshore evasion. Based on panel regression analysis, I find that cross-border deposits in traditional haven jurisdictions, taken as a proxy for offshore evasion in the literature, have declined substantially. However, I also find that these offshore assets are being relocated to few non-compliant tax havens and moreover, “non-haven” offshore financial centres, most notably the United States, which has yet to commit to reciprocal and automatic exchange of information and establish a public register of ultimate beneficial ownership.