Research project by Casi, Mardan & Muddasani
Research project by Casi, Mardan & Muddasani funded by the United Nations University World Institute for Development Economics Research.
Anecdotal evidence from recent leaks, such as the Panama Papers in 2016, the Paradise Papers in 2017, the Pandora Papers in 2021, and the Suisse Secrets in 2022, revealed the pervasive use of complex legal structures to hide income and wealth overseas and evade tax obligations at home. Many countries have implemented measures to combat the practice of offshore tax evasion, especially via enhanced collection and exchange of information.
This project investigates the effect of a recently introduced, innovative policy tool that aims at detecting remaining loopholes in the existing systems of automatic exchange of information (AEOI), namely the Mandatory Disclosure Regime (MDR) under Action 12 of the Organisation for Economic Co-operation and Development’s (OECD) Base Erosion and Profit Shifting program. The EU introduced the MDR in June 2018 under the council directive 2018/822/EU, also known as DAC6. In contrast to existing AEOI models such as the Foreign Account Tax Compliance Act of the U.S. and the Common Reporting Standard of the OECD, the key innovation of DAC6 is that it requires intermediaries, such as consultants, lawyers, or financial institutions, to report certain cross-border arrangements to local tax authorities.
The aim of the project is to provide evidence on the impact of this new tax transparency initiative on cross-border tax evasion and to investigate to which extent cross-country differences in regulatory environment affect its overall effectiveness. This project has been awarded a grant from the United Nations University World Institute for Development Economics Research (for more information see https://www.wider.unu.edu/opportunity/detecting-and-countering-illicit-financial-flows-%E2%80%93-second-call)