Acta Univ. Agric. Silvic. Mendelianae Brun. 2017, 65(2), 721-726 | DOI: 10.11118/actaun201765020721

Tax Information Exchange Influence on Czech Based Companies' Behavior in Relation to Tax Havens

Jan Rohan, Lukáš Moravec

Czech University of Life Sciences Prague, Faculty of Economics and Management, Department of Trade and Accounting, Kamýcká 129, 165 21 Prague 6, Czech Republic

In recent years, borders between countries have been opened gradually thanks to globalization, which is reflected in minimal barriers to the movement of persons and capital. This situation could be potentially abused by taxpayers willing to shift the capital to preferential tax jurisdictions. Due to facts aforementioned, several instruments for tax administrators have been introduced. Bilateral and multilateral instruments are concluded with particular countries for the purpose of obtaining information about foreign residents staying abroad but also to avoid double taxation or double non-taxation. In recent years there has been an increased number of companies in the Czech Republic whose owners come from preferential tax jurisdiction from 12,676 up to 13,167. This paper is focused on the Czech taxpayers' reaction on concluding agreements concerning exchange of information in tax matters with preferential tax jurisdictions, the so-called "Tax havens". The Difference-in-Differences Method was carried out to predict the taxpayers' behavior. The model shows that the agreements work well as a preventive tool. If the Czech Republic concludes the agreement with the tax haven, the taxpayers lose their anonymity. This results in their relocation into tax havens that are not covered by the agreement in order to keep their anonymity.

Keywords: taxpayer, tax, tax haven, tax information exchange agreement, tax administrator, jurisdiction

Grants and funding:

This paper is a partial result of the research conducted under the IGA PEF CZU 20131056 granting project.

Prepublished online: April 30, 2017; Published: May 1, 2017  Show citation