Are Tax Havens and Offshore Financial Centers Cracked Down On? A Study on the International Standard of Exchange of Information on Request

Yijun Li, Mark (Shuai) Ma*

*Corresponding author for this work

Research output: Contribution to journalArticleAcademicpeer-review

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Abstract

To ''crack down'' on tax havens and offshore financial centers, the Organisation for Economic Cooperation and Development (OECD) has promoted an internationally agreed tax standard of exchange of information on request since 2009. Using a difference-in-differences analysis, we find that the implementation of the standard significantly reduces aggressive tax avoidance by affected U.S. multinational firms with material subsidiaries in tax havens and other offshore financial centers. The effects are stronger when firms have more incentives and opportunities for income-shifting or when tax enforcement is stronger. Overall, our study helps the OECD and other regulators better understand the effect of the internationally agreed standard on corporate tax avoidance.

Original languageEnglish
Pages (from-to)295-318
Number of pages24
JournalThe Accounting Review
Volume97
Issue number7
DOIs
Publication statusPublished - Nov 2022

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