Essays on Tax Information Exchange in a Post-BEPS World
The thesis investigates information exchange for tax matters. It covers both reporting of taxpayers to tax authorities and communication between tax administrations on taxpayers’ activity. The motivation for the research is recent global cooperation on counteraction to profit shifting and base erosion. Extended and systematic tax information exchange is a key component of the cooperation. I employ the most advanced communication mechanisms, namely cheap talk and Bayesian persuasion, to model revelation, propagation, and aggregation of information starting from taxpayer and finishing with interaction between tax administrations. In different chapters of the thesis, I show how taxpayer’s propensity to tax avoidance affects accuracy of tax reporting and how countries can assist tax avoidance strategically distorting information provided by taxpayers. Moreover, the analysis reveals the way some countries can benefit from profit-shifting activity, such as offshores and offshore financial centres. The main result of the research is that information exchange alone is not a solution against aggressive tax planning and offshore jurisdictions. Communication channels can be used to distort information even it is truthfully revealed. To hinder manipulation with information revelation, communication protocols should cease power of a source country over the way tax information is collected and reported.
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