The Use of the OECD Commentary
Elgar Tax Law and Practice series
Chapter 15: EXCHANGE OF INFORMATION AND ASSISTANCE IN COLLECTION (ARTT. 26 AND 27)
‘Tax information’ can be defined as ‘knowledge communicated or received concerning taxpayers’ particular facts or circumstances’: information adds new data to that already known, cannot be predicted and resolves uncertainty, so it clearly has economic value. More specifically tax information allows agents (tax authorities) to make choices that yield higher expected payoffs/utility than they would obtain from choices made in the absence of information. Tax information should be understood in the context of the interdependent tax strategies of the RC and the SC. The RC has the predominant strategy in so far as it extends its tax jurisdiction to the foreign income (sourced in the SC) of its residents, and the taxes paid in the SC are fully credited against the taxes paid in the RC. There is however moral hazard and asymmetry of information, because taxpayers may under-report (or not report) in their RC their income produced in the SC. This opportunistic behaviour is, at least in part, determined, on the one hand, by the fact that the RC cannot enforce its extra-territorial legislative tax claims directly in the territory of the SC, and, on the other hand, by the fact that the SCs may offer low or no taxation to non-residents investing in that country and not cooperate with the RC in respect of enforcement of claims by the RC. The result is that the high mobility of passive or financial income leads to an obfuscation of relevant tax information through bank secrecy and other forms of confidentiality pursued by un-cooperative SCs.
You are not authenticated to view the full text of this chapter or article.
Elgaronline requires a subscription or purchase to access the full text of books or journals. Please login through your library system or with your personal username and password on the homepage.
Non-subscribers can freely search the site, view abstracts/ extracts and download selected front matter and introductory chapters for personal use.
Your library may not have purchased all subject areas. If you are authenticated and think you should have access to this title, please contact your librarian.