The tax-price elasticity of offshore tax avoidance: Evidence from Ecuadorian transaction data

Arbeitspapier

This study leverages a unique data set on the universe of transactions exiting the Ecuadorian economy to estimate the tax-price elasticity of demand for tax-sheltering activities using offshore fiscal havens. I determine this elasticity quasi-experimentally by comparing the evolution in funds sent by individuals and corporations to tax havens for different purposes (e.g. dividend payments, bank account deposits) versus similar transactions with non-tax havens around changes to the Ecuadorian Impuesto a la Salida de Divisas, which effectuated an ad valorem tax on transfers to tax havens. I document large responses of funds sent abroad for tax-avoidance and tax-evasive purposes to the tax price of transacting with fiscal havens. I also provide evidence that individuals with financial connections to tax havens declare additional capital income on their tax returns in the post-period, and due to the progressivity of the tax schedule pay a higher average income tax rate as a result.

Object Details

• ISBN: 978-92-9267-127-3
• Language: Englisch

References and Relationships

• Bibliographic citation: Series: WIDER Working Paper ; No. 2021/187

Classification and Topics

• Classification: Wirtschaft ; International Financial Policy: Financial Transactions Tax; Capital Controls ; Taxation and Subsidies: Externalities; Redistributive Effects; Environmental Taxes and Subsidies ; Tax Evasion and Avoidance ; Fiscal Policies and Behavior of Economic Agents: General
• Subject: tax evasion ; tax avoidance ; tax havens

Contributors, Places and Time

• Event: Geistige Schöpfung
• (who): Brounstein, Jakob
• Event: Veröffentlichung
• (who): The United Nations University World Institute for Development Economics Research (UNU-WIDER)
• (where): Helsinki
• (when): 2021

Further information

• DOI: doi:10.35188/UNU-WIDER/2021/127-3
• Handle: http://hdl.handle.net/10419/249493
• Last update: 10.03.2025, 11:43 AM CET