Tax Havens, Accounting Experts, and Fee-Setting Rules

26 Pages Posted: 27 Jan 2018

See all articles by Thomas A. Gresik

Thomas A. Gresik

University of Notre Dame - Department of Economics and Econometrics

Kai A. Konrad

Max Planck Institute for Tax Law and Public Finance; Centre for Economic Policy Research (CEPR); CESifo (Center for Economic Studies and Ifo Institute for Economic Research); IZA Institute of Labor Economics

Date Written: December 11, 2017

Abstract

Tax havens differ in the specific tax planning arrangements multinational firms can use to reduce their tax liabilities. Given the complexity and cost associated with identifying the most effective tax haven to use, an accounting firm can act as an intermediary between tax havens and multinational corporations. We analyze a model with horizontally differentiated multinationals and tax havens to study the role accounting firm intermediation has on tax haven prices, multinational tax planning choices, accounting firm profits, and tax revenues. In equilibrium, uniform accounting firm fees generate higher accounting firm profit, less tax avoidance, and higher tax revenues than either full price discrimination or haven-specific fees.

Keywords: tax haven, accounting firm, horizontal differentiation, double marginalization, fee-setting rules

JEL Classification: M410, H260, H730, F380

Suggested Citation

Gresik, Thomas A. and Konrad, Kai A., Tax Havens, Accounting Experts, and Fee-Setting Rules (December 11, 2017). CESifo Working Paper Series No. 6774, Available at SSRN: https://ssrn.com/abstract=3109356

Thomas A. Gresik (Contact Author)

University of Notre Dame - Department of Economics and Econometrics ( email )

P.O. Box 399
Notre Dame, IN 46556-0399
United States

Kai A. Konrad

Max Planck Institute for Tax Law and Public Finance ( email )

Marstallplatz 1
Munich, 80539
Germany

HOME PAGE: http://www.tax.mpg.de/en/pub/home.cfm

Centre for Economic Policy Research (CEPR)

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CESifo (Center for Economic Studies and Ifo Institute for Economic Research)

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Munich, 81679
Germany

IZA Institute of Labor Economics

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Bonn, 53072
Germany

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