Tax Haven Welfare and the Crackdown on Secrecy: Evidence from Night Light Emissions

33 Pages Posted: 19 Oct 2023 Last revised: 15 Jan 2024

See all articles by Hoang Ha Nguyen Thi

Hoang Ha Nguyen Thi

Goethe University Frankfurt

Alfons J. Weichenrieder

Goethe University Frankfurt - Department of Applied Econometrics and International Economic Policy; Vienna University of Economics and Business; CESifo (Center for Economic Studies and Ifo Institute)

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Date Written: October 17, 2023

Abstract

Following numerous high-profile international initiatives, tax haven jurisdictions have been nudged into agreeing on tax information exchange. We analyse whether these agreements had measurable effects on the economy of cooperative tax havens. As GDP data are missing for many small tax haven jurisdictions, we use night light data as a proxy for economic activity. Depending on the exact list of tax havens, using this proxy allows us to increase the number of tax haven jurisdictions by up to 25 percent compared to using GDP. We find that tax havens which have signed more tax information exchange agreements experienced a significantly higher economic activity, as proxied by the sum of night light emissions. This applies to agreements that provide information exchange on request as well as agreements that implement automatic information exchange. When we use GDP as a measure of economic activity, tax information exchange agreements are not associated with a differential development of economic activity. Both observations suggest that information exchange treaties so far have not reduced economic growth in more cooperative tax havens.

Keywords: tax haven, night light emissions, tax information exchange, economic development

JEL Classification: H26, H87, O11

Suggested Citation

Nguyen Thi, Hoang Ha and Weichenrieder, Alfons J., Tax Haven Welfare and the Crackdown on Secrecy: Evidence from Night Light Emissions (October 17, 2023). WU International Taxation Research Paper Series No. 2023-10, Available at SSRN: https://ssrn.com/abstract=4605142 or http://dx.doi.org/10.2139/ssrn.4605142

Hoang Ha Nguyen Thi

Goethe University Frankfurt ( email )

Grüneburgplatz 1
Frankfurt am Main, 60323
Germany

Alfons J. Weichenrieder (Contact Author)

Goethe University Frankfurt - Department of Applied Econometrics and International Economic Policy ( email )

United States

HOME PAGE: http://www.uni-frankfurt.de/fb02/weichenrieder/

Vienna University of Economics and Business ( email )

Welthandelsplatz 1
Vienna, Wien 1020
Austria

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

Poschinger Str. 5
Munich, DE-81679
Germany

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