Voluntary Disclosure Schemes for Offshore Tax Evasion: An Analysis

33 Pages Posted: 14 Mar 2016

See all articles by Matthew Gould

Matthew Gould

University of Westminster

Matthew D. Rablen

University of Sheffield - Department of Economics

Date Written: February 11, 2016

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

JEL Classification: H260, D850

Suggested Citation

Gould, Matthew and Rablen, Matthew D., Voluntary Disclosure Schemes for Offshore Tax Evasion: An Analysis (February 11, 2016). CESifo Working Paper Series No. 5750. Available at SSRN: https://ssrn.com/abstract=2747291

Matthew Gould

University of Westminster ( email )

309 Regent Street
London, W1R 8AL
United Kingdom

Matthew D. Rablen (Contact Author)

University of Sheffield - Department of Economics ( email )

9 Mappin Street
Sheffield, S1 4DT
United Kingdom

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