 So welcome back everybody, also welcome to our Rector who has joined us today. We are now on the final stretch, the grand finale of this conference, which I hope you enjoyed as much as I have enjoyed it. I have now the pleasure to introduce our keynote speaker for this keynote. I'll do this very briefly because we want to have as much time as we can for the keynote. That will be 14 minutes, then there's 30 minutes of Q&A, and then Kunal will take over and our Rector will come in as well. So the keynote today is on the challenge of short text havens, a topic that has come up in quite a few sessions already of this conference. And it is delivered by Niels Johanesen who is here to my right. So we are very pleased to have Niels today with us. Niels is a professor at University of Copenhagen, and born, raised and bred I think in Copenhagen. And he tells me so that he's moving on to Oxford Zoom now. He's also the co-director of the EU tax observatory. Niels' work covers a quite range of research topics, and I think the ones that are probably most interesting for us here today is of course in the areas of public, finance tax havens and also tax evasion. He has published in the best journals that you can think of, American Economic Review, Journal of Public Economics and so on and so forth. He has also given quite a few policy talks with an audience, with a lot of people working with policy makers or being policy makers. I think that that's also very nice to know. And he has received numerous awards, for example, also one for excellence in teaching. So I look now forward to a very instructive and full of learnings-filled keynote, and with that I leave the floor to you. Thank you very much for that introduction, and thanks for having me, and thanks for coming here. I'm looking forward to it, not least to chat with you guys after my talk. So the talk is called the Challenge of Offshore Tax Havens, and let me just, because time is short, jump right in and try to say in a few words what does this offshore challenge consist in from the perspective of a public finance economist. And I'll do that by saying in a very stylized way, so what do offshore tax havens do? And I've listed three things here, so the first thing that they do is that they, you could say, help multinational firms obtain low taxes on their profits. And how do they do that? Well, they do it by offering basically very low effective corporate tax rates, meaning that multinational firms were able to book their profits in these places, shift their profits away from where they actually belong to, and into these offshore havens, get a low tax rate on their global profits. So the second thing that you could point to is that they help wealthy individuals evade taxes on personal income. And here the keyword is secrecy, so the idea that these wealthy individuals are actually kind of taxable on their full income where they live, but because of these different secrecy technologies and tax havens, they're able to kind of hide the income that they earn in these places, so they are very hard to tax for the domestic tax authorities. And finally, tax havens also help criminals, corrupt elites, hide and launder their innocent funds, and you could call that like money laundering. And again, the key note here, the keyword here is also secrecy, obviously. So economists have been working with these topics a lot for the last 10 years, and if you wanted to kind of summarize, what have been the major questions they've tried to address in this field, you can do it the following way. So first, economists have tried to measure the scale of this undesirable activity that happens through tax havens, and also measure its consequence. So like how many profits are booked in havens, what are the revenue losses for the countries where the profits actually belong, for example. This is no easy task. One obvious reason is that a lot of the stuff that happens in tax havens is secret in nature, meaning that there are no official statistics to resort to, so often you need to be very creative in taking out data sources that speak to this measurement. And the second thing that economists have been doing a lot is to try to, because there's been prolific policy activity in this area, so we've been trying to say something about how good these policies are, how effective are they at stopping this undesirable activity through tax havens. And the two things are kind of connected, because I think that economists, by pointing to the large scale of these activities, they've actually been instrumental also in pushing the policy agenda forward and making policymakers understand the need to actually do something about these problems. So I'm not a development economist by training, but kind of being asked to come here was a great chance for me to think more carefully about how developing countries fit into this picture. And so I decided to do two things in this lecture. So the first is to try to bring some evidence to the table, saying something about whether there is or whether there is not like a development gradient in exposure to offshore tax havens. So should governments in developing countries be more or less concerned about this problem than their counterparts in developed countries? And the second question I decided to think about is like whether, much of the policy measures that are being taken right now are being developed like in a global setting, where basically it's one policy that is rolled out globally, and I want to think about whether these policies, whether they are actually these designs, whether they are a good fit for developing countries or whether you can do something to maybe make this work better in a developing country context. And so the first bullet I will try to really do something simple but at least quantitative to try to bring different data sources to the table, and the last point is going to be more like a qualitative discussion. And just because I don't have two hours but only 40 minutes, then I decided to just look into one of these bullets and not try to cover all three of them. So we're going to focus here on offshore tax evasion, the idea that wealth individuals can hide their assets in tax havens and escape evade taxes in their home country. All right, so before we dig into these two questions, let me just take one step back and try to tell you what I think are the three most important and also robust findings about offshore tax evasion that economists have come up with in the past five, ten years. So the first one is that actually there's quite a lot of households own quite a lot of wealth in tax havens so there's a lot of money out there that we need to think about like what is it doing and is it tax compliant and so on. Second insight is that these offshore assets are extremely concentrated at the very top of the wealth distribution. So obviously wealthy people are wealthier than others. That's self-evident but offshore assets are much more concentrated than other types of assets at the top of the wealth distribution. And finally, it's also a well-documented fact or at least I mean there's a caveat here because this might be changing these years but it used to be the case at least that a large share of these offshore assets were not tax compliant. So it could be because the motive for putting them in the first place in the tax haven was tax evasion. Let me just say a little bit about how people have made these points. So the first paper to really convincingly measure offshore assets in tax havens was Gabriel Soukman like ten years ago he shows that if you combine different macro statistics you can make a convincing case that households globally own around $6 billion or $6 trillion in financial assets in tax havens. So how do you measure that? That's really something that is in its nature secret but the idea here is that when households are hiding assets in havens they'll be in these international financial statistics that try to measure these cross-border flows or stocks of assets they'll be able to capture the liability side of these investments but not the asset side meaning that basically the difference at the global level between cross-border liabilities and cross-border assets they should be the same, there is a difference and that reflects exactly kind of hidden assets. And just like a simple example illustrates the idea as a Danish taxpayer have a Swiss account, a secret Swiss account and I use it to hold the Microsoft stock for example where then the US, the statisticians in the US will know that there is like a Microsoft stock that is owned by someone foreign so they'll record like a foreign liability but there is no country that records a foreign asset because Denmark don't know what I'm doing because it's like my hidden account and the Swiss bank knows that there's not like a Swiss person owning this asset. So when people hide assets in tax havens there'll be like a gap between liabilities and assets in these official financial statistics and basically like the gap reflects exactly like the size of this hidden wealth. So at this point you might be a bit concerned about this kind of residual measurement I think maybe this graph taken from the paper will convince you a little bit more so this basically show you by country the size of this liability asset gap and countries are ranked here by like the size of the gap so like at the top here you have Luxembourg and so Luxembourg is a place where there's a lot of like it's a tax haven, there's was bank secrecy and there's a huge fund industry and basically here like Luxembourg says well there are two trillion dollars coming into Luxembourg in foreign portfolio investment but if you sum up across all the other countries in the world they are only recording assets of 1,000 billion dollars into Luxembourg and so the difference these 1,000 billion is arguably reflects like hidden assets and you can see so after Luxembourg you have Cayman Islands and then you have Island they're all kind of like tax havens that play a big role in the funds industry so this is really kind of something that convinced me that you know this is probably right. Alright, the second insight is about like the concentration of these offshore assets at the top of the wealth distribution and here I think the first paper to say something convincing about that is work by myself and Gabriel Soukman and Annette Alstedtzer were basically just a paper about Scandinavia so we have like really detailed wealth data about like around 10 million households in Scandinavia and the name of the game here was to find kind of micro data saying something about people's like hidden offshore wealth combine it with these like wealth records and then see like so who actually in Scandinavia owns the offshore and we have two samples of like two micro samples so one is leak data from a big Swiss private bank and the other one is an amnesty where people come forward and say well I had these offshore assets in both of these sources it turns out that around half of the offshore assets belongs to the top 0.01% alright that's really like in Scandinavia with 10 million households the top wealthiest 1,000 households own around half of the offshore assets so like a massive concentration you might think that this is just Scandinavia actually like a number of papers out there now that do like similar things in different countries also developing countries so I listed a few here from Argentina, Colombia and some work I'm doing now in South Africa and I mean so the magnitudes vary a little bit across countries but the basic picture is the same this is a picture from our paper that shows you the red and the black lines show you so basically by wealth group on the X axis show you like the share of the offshore assets that are held like in these different wealth groups and you can see in both samples around half of the offshore assets belong at the very top like to the right the 0.01% of the richest households and that's like it contrasts massively with the dotted line which is the distribution of recorded wealth in tax returns okay so offshore assets are very concentrated at the top relative to other kinds of assets then finally a large share of these offshore assets are taxed non-compliant so that fact shows up in a number of settings so for example in the cases where you can kind of you can study the question in leaked samples you will see that the compliance rate is typically very low so in our case we actually like for these guys with an account in a Swiss bank we check well had these people had they actually self-reported their account and it turned out to be the case for 5-10% of the people the remaining 90-95% had not self-reported the income from that account and that fact also shows up in different settings and also like a more macro level the fact that you know that these amnesties that you know the countries do to bring home offshore assets once they are they are combined with a credible detection risk you have like really really large declarations of offshore accounts and like these declarations are you know in their nature kind of assets that were not tax compliant to start and here I want to just emphasize this caveat that basically a lot of things are going on now in terms of policy and I'll talk more about that in a second and so it could be that this third fact here is changing so that's an important question alright so let me now move on to the first question that I decided to ask myself here like preparing the lecture and the question is so is there a development gradient in the exposure to these offshore taxings so here I really try to think of what are the data sources that allow us to say something about this exposure by country basically like not at the global level but by country that involves both kind of like really kind of hard macro data it also involves some of these leaks that are often helpful to say something about like cross-country patterns and also like so estimates that come out of research papers and try to combine these different sources before I move to the data let's just ask ourselves should we care about this why do we care about whether this challenge is more or less serious in developing countries so I think one way to motivate that question is that like what you mentioned before that a lot of the policy development now happens at the global level so it could be the OCD could be the global forum which is like part of the OCD or other international forum and of course when you start thinking about how should we address this challenge then different policy designs are possible you can address it in different ways and the policy preference here might really like depend on what kind of country you are how many administrative resources you have and ultimately also like you are the level of development and you know like if we are trying to balance these like different policy preferences across different countries well then it kind of matters like where the problem is right like if it's if this offshore challenge is really only or almost only affecting developed countries well then maybe it's fine that we have like policy designs that really you know fit the needs of developed countries but you know like if it's the other way around like if the challenge is actually bigger in developing countries then we should take more seriously kind of the concerns and the needs of developing countries when we design these global approaches to the offshore challenge I also started before I looked at the data I thought about what do I expect here like what are my priors and I think it's actually not obvious what to expect I think there are arguments like suggesting that you would find more offshore exposure in developing countries first of all you know that these assets are really concentrated at the top well you often have more inequality in developing countries so that would speak to having like more offshore exposure you also probably on average have like less enforcement on foreign income like so and that you know maybe it's easier to do offshore so then you would expect more of it and then there are a couple of things that you know say well maybe people are not always like they put money offshore like the first reason is not offshore avation it could be that you're just worried about a weak or like yeah a weak domestic financial sector maybe you are corrupt and you get your gains in a corrupt way and then you kind of foreign banks and then like once you have your money there then you also kind of engage in innovation but there are also I think arguments that go the other way you could I mean just as there is probably on average kind of less enforcement of taxation on foreign income there's probably also kind of more domestic evasion opportunities so if you can evade easily domestically why would you bother to to do it offshore sometimes rates are low like in developing countries on some of these types of income and then there's also like a geographical argument here that we know like from other studies that kind of matters how close tax havens are to you many tax havens are either in Europe or like in the Caribbean or in East Asia and you know like so I would say that the average developing country probably like has a longer distance geographical distance to the to the closest tax so that would speak in favor of you know like having less exposure in developing countries but let's have a look at the data now that we have established that it's not kind of a priori obvious which way this gradient goes and I'll start by looking at data from the bank for national settlements which is an international institution that collects information about different things for example cross border deposits in 49 financial centers so in the 50 biggest financial centers in the world you can actually see kind of directly the deposits that are owned by foreigners and you know what the counterpart countries are so you have an invasion here about like how many deposits do South Africans have in Switzerland how many deposits do Indonesians have in Luxembourg and so on alright so that's you know like at face value this is a great data source it also has limitations so first of all it's only one class of assets here it doesn't cover kind of all financial assets but only deposits it's also not all tax havens that allow these data to be published I think you know that that's really something we should as researchers kind of push that that it'll be more publicly available but now I can only look at a subset of tax havens here and also this data it doesn't look through kind of holding structures so if I decide to be a little bit smarter than the others and hold my Swiss account not in my own name but through like my own you know like cooperation in Panama then like this data set will say well this is kind of Panama owned deposits although in fact it's my deposits alright so this is another limitation so when I just take like make this just make a simple bin scan plot here just by really grouping countries by their GDP per capita their income level and then I say how important are these offshore deposits as a fraction of GDP you can see that there's almost no gradient here like it's a very weak gradient and if anything there seems to be slightly more of these offshore deposits in like belonging to developing countries than developed countries but but not a very not a very steep gradient so the next data source I found is like from a paper by again like myself and Gabriel Soukman and an asset seater where we kind of try to to like really improve those statistics by kind of allocating all financial assets so not just the process but also stocks and bonds and so on in all tech savings are not just the ones the public public statistics with the BIS and also going to try to allocate stuff that are that are looked that belong to to these holy structures so this is kind of like trying to solve the problem like more generally but also imposing some like strong assumptions and basically you cannot do this really after 2007 so it's like it's also pretty pretty old data and once you do that you get this picture like so this is the same picture but just for another kind of measure of offshore financial wealth and here there's just there's no gradient at all it really looks like this offshore challenge is really I mean of course there are there's variation across countries but it doesn't correlate at all with the income level of the country all right so it's essentially the same challenge that we are facing whether we are developing or developed countries so until now I talked only about assets so another asset class that is receiving more and more attention is like so offshore real estate so for example I have a paper where we look at you know who are the owners of like the real estate in London for example in the UK there's a lot of that that is owned by offshore corporations and we're also trying to find out so who are the beneficial owners hiding behind these corporate shells so now I'm going to show you some numbers from another paper that focuses more on another property market so in Dubai and they have access to leaked data where you can actually see like who are the owners of these Dubai properties and again what I'm trying to do now is to say something about how like ownership of Dubai properties how that correlates with income limitations here this is only one property market and actually I think that this paper confounds a little bit offshore evasion and just housing there are just many people who just expats in Dubai who just lived there and buy a house and they would also be counted here if you despite these limitations make the same exercise you get this picture and here suddenly you start seeing like a development gradient so that it's the picture you suggest that you know like low income countries tend to have like more to buy property relative to the size of their economy than high income countries and actually we in our paper for London we see a similar pattern kind of that African countries for example and Southeast Asian countries they really stand out as like they seem to be kind of major owners of this real estate in London that has helped through corporations in Jersey or other places and then finally I'm going to show you data here on like incorporation in offshore taxing so this is so we know that there are many people who like so many wealthy people who hold offshore assets they will often do it in their own name but they will do it through like a corporate shell in another heap for example and so this international consortium of investigative journalists so they have been actually like over a number of years they have collected kind of leaked data from many different sources the most famous one is probably the Panama papers from Mosaic, Fonseca like one law firm in Panama where you actually have data on you know like the incorporation of these offshore shells and who kind of the real owner like of these shells was so you don't know anything about kind of the assets that are underneath you don't know at all like whether it was set up for legitimate purpose or whether it was really for set up for tax evasion purposes but we know like part of it at least is tax evasion and of course like here again when you have a lead sample this is only like data from one corporate provider so it could be like that there is some selection into that and so on and so on but let's just try to make the same exercise nevertheless to see like are there more or less incorporations done by people in low income countries relative to high income countries and here it seems if you kind of relate the number of incorporations in these offshore jurisdictions to GDP you find kind of the opposite slope suggesting that like these more sophisticated evasion structures maybe are more kind of prevalent in all right so if you bring all this together you get this picture that is somewhat mixed you see that if you just focus on financial assets you get basically no gradient we are facing the same challenge irrespective of our income level there might be a bias where like developing countries have a different composition of their offshore portfolio with more real estate in it less financial assets and there might be some science here that maybe evaders in developed countries are slightly more sophisticated in terms of using offshore companies in their structures but at least I mean there is nothing here telling us that you know we should only be concerned with the needs of developed countries because this is only a rich country phenomenon it is not it's really kind of this also is a serious challenge in developing countries all right so how am I doing on time do you have a sorry ten minutes all right great so let me say something about policy now so this is really this is a very active policy field with a lot of work done over the last decade or two decades and the question here is really like whether these new kind of emerging policy designs whether they we should think that they are actually working well are they a good fit for developing countries and so the background here is that you know like that most of this effort has been spearheaded by the OECD and what had I mean so and you know different policy designs have been proposed but what has you know prevailed as the dominating paradigm here is really a cross-border exchange of information all right and the idea is pretty simple and intuitive the idea is that you know like the problem here for tax authorities is a lack of information it's really like we have people who have their assets offshore and we don't know how much income they have so we can't tax it so if we can bring the tax savings to tell us something about that income we can just go ahead and tax it as if it were domestic income all right so just information exchange across borders is just a way to overcome this fundamental information imperfection and so most of this the policy efforts here have really been focused on making offshore tax savings deliver information on these assets and on the income that they generate all right so that's the principle that you know really lies under many of the efforts in the last decade and things have been moving fast and I would say like so what has now emerged in the last five years as kind of the specific dominating policy design is what you could say is comprehensive and automatic information exchange meaning that banks basically all over the world they need nowadays to always identify the beneficial owners of the accounts all right so they need to know who the beneficial owner is if there is one it could be like a listed company in Microsoft there is no beneficial owner but if there is one they have to know who it is and then once they have done that they need to collect account information and then they have to share that account information with the home country of the account owner all right in an automatic and comprehensive manner meaning that if I tomorrow open an account in Switzerland well then next year the data sector authorities will get a report from my Swiss bank saying what was my end of year account balance did I earn this account in terms of interest dividends other things that in principle you know like really allow them to tax this income as if it were domestic income and so this is a surprise to many that actually we've come so far this is like a super ambitious policy that really has like it's incredible that we've come to this point where basically we have been able to like set up a system with this like third party report information in a broader manner and then you might think ah but you know like so is it really does it really cover kind of all the important places aren't there still places where I can just you know get around this well basically like I would say like all the major financial centers in the world are doing this there's no kind of obvious place where they have like a good kind of wealth management industry where you can just go and circumvent this and so more than 100 countries engage in this kind of information exchange and so Angela was telling more about this in her talk yesterday so in theory this is great right this is really like if you ask like a public finance theorist what we need he'll say this is what we need just need to bring this information like back to the home country and then you know they can they can really they can do like optimal taxation because they can really treat kind of domestic and foreign financial income in exactly the same way which is what you want basically in practice this is not easy right it's not easy to make work and I think we're still also in the in the infancy of this and we're still learning and we're getting better all the time probably but I think we need to be aware that there are some considerable difficulties so just like imagine the tax authority they receive kind of a batch of account level data from like a hundred different countries and now they have to start finding out okay like so this report that I received they're gonna Mr. Jones who's the Mr. Jones kind of in my country that is kind of that has this foreign account you have to match all this foreign information to domestic tax payers sometimes there's a tax ID number in the report but not always so there's a lot of kind of stuff that just can't be matched once you have matched two individuals you have to start you know matching like this foreign information to domestic income categories that's also not obvious in practice and then one thing that I have learned the last year I think just that so even once you have like done step one and two perfectly so okay I know Mr. Jones had a thousand or a million dollars of dividend income in Switzerland so then I need to tax that but actually in order to tax it I need to know something about the exact portfolio that he has because you'll have like the right to get credit for foreign taxes that he paid so you need to know exactly like whether he held US shares or German shares to be able to actually assess like what taxes he already has paid abroad and credit that on a domestic tax so just like handling foreign sources taxes is a mess and kind of the information that you get from foreign banks is not enough to do this in an automated way so there's a lot of practical difficulties that probably can be overcome but they are there okay and I think that the right way to see this is really that you know like this new range is like like you have to see it as an enforcement tool and you know and this is a tool that tax authorities can decide to use or not use and if you decide to use it it requires a lot of administrative resources a lot of capacity inside tax authorities to actually use this information right and I think you know I've been working like with this kind of data like in three countries like Denmark, the US and South Africa and I think like in all three countries there's clearly scope for improvement and this is difficult everywhere like to do this right so if we think of this kind of so is there something we could do is there something easy we could do here to kind of address this challenge and here I want to kind of move back in time actually because I think in the last 20 years to kind of the first policies that the European Union introduced to address this challenge of observation so they made basically they were making deals with a number of offshore tax savings and they were basically here the key instrument was not information exchange but was anonymous with holding tax so the EU was asking Switzerland for these accounts that were owned by EU residents impose withholding tax on the interest accruing to these accounts and then send the revenue or most of the revenue back to the home conference without saying who the account owners were so kind of anonymous with holding as an alternative to information exchange and so this has gone like really out of fashion and I mean so that specific policy had a number of laws that made it completely useless basically but if you think about like where we are now I think it's not crazy to see like an alternative to the current invasive change would be well now banks are doing all the hard work kind of looking through all these all through like these holding structures identifying beneficial owners and so on so there is an alternative where they use this information to levy with holding taxes on the income and sending it to the home countries of the account owners without disclosing who the owners are and you know of course there is a trade off you can argue you know that I mean transparency is always good it's good for taxidors to know like who the people are if with this solution you cannot have progressive taxation because you will just like get a flat withholding tax on all income and so on and so on so they are clearly cons but I think there is also one pro which is like really that you especially if you have low administrative capacity that then you just get a check from tax havens once a year instead of getting like a batch of information that you have to work really hard to kind of to match with domestic tax records and try to impose taxes and like in principle you could imagine that these two policy designs could coexist right it's totally possible so we are asking the banks to do the hard work you can imagine you say it's up to the country to the home country of the account owner itself to say whether we want information or whether we just want a check and countries might have different preferences over these two policies and I can imagine that it might call it the development that maybe on average kind of tax authorities in developing countries are like more used to handling big data and combining them and like third party reports and so on probably not true always but this could kind of call it with development and this is really what I'm trying to say here that what we are doing now is that we are really with design policies at the global level and we really make one design that we require everybody to use I think this policy design maybe is less well suited for countries with less administrative resources and probably on average there will be developing countries it might be desirable to really adopt a more flexible policy menu where we could kind of leveraging the same information that banks are digging out now for us we could leverage in two different ways all right just a very brief discussion because now I really said what I wanted to say about this field of offshore tax evasion and I think the key insight is really this that the policies that we develop they rely heavily on information exchange and that is just like difficult in practice and probably more difficult on average for developing countries I want to return briefly to other things that tax havens do have a few minutes left perfect so I decided to focus on offshore tax evasion and see if there are some of the same issues arising there and I think the question is yes so one key policy innovation in the field of corporate taxation is the global minimum tax of 15% so there's a lot of details here but the key principle is this assume that you have like a multinational firm like Google and some of their profits are booked in Bermuda and let's just assume for the sake of the example that taxes these profits at 1% well then with this new global minimum tax the US can say well you know there's a 15% is the minimum tax rate in the world so if Bermuda foregoes that you know that right the tax of the 50% we will impose a top of tax of 14% to bring the total global taxation up to 15% and the question is like do we have some of the same problems here I think yes because like the way this is done in practice so how does the US know what the taxation in Bermuda is of Google well because under this policy Google now has to give them information about where they earn revenue where they pay taxes and so on on a country by country basis and the US will then share that information with other countries so this information sharing is also here kind of like a key mechanism that is basically a requirement for this to work properly and you can imagine if you are a country that is not so good at handling these reports from foreign tax authorities and match it to your domestic sources and so on then maybe this top of taxation just is also difficult and maybe countries with this problem will not benefit a whole lot from this kind of information sharing but I think there's another side of this policy which is that you know actually the global minimum tax also changes the incentives a lot for tax savings because now in principle like if you are a tax haven there's no incentive to have a low tax rate below 50% more because if you have low tax rates then the home country will just kind of impose the tax that you forego yourself so there's an incentive here for tax havens to actually raise their tax rate up to the 15% and that means basically that you will probably see less profit shifting probably and you know through that channel you can have a beneficial impact also on countries that are less good at handling information, international information exchange. Alright so that was the final point I wanted to say you know like that there's probably some analogs also in these other fields where the offshore challenge is relevant yeah let me just very briefly sum up so from the data kind of tells us that you know like the offshore challenge is not just relevant for developed countries it also appears that developing countries are as or even more exposed to it than developed countries are second point like these new global policy standards to counter the offshore challenge they often rely heavily on information exchange and there's a real risk I think that with low administrative capacity are not fully able to reap the benefits of these policies there's one thing and the other thing is like alternatives do exist there are ways to kind of leverage like all this new information collection done by banks in a way that is kind of easy more easily minimal than the current regime. Thank you very much so thank you very much Niels for this definitely lots to think about and lots to discuss now we now have plenty of time for questions and answers then you have a question please raise your hand and then we have colleagues who will go around with the mics. Thank you Dominika Langmeier, Catholic University Eichstedt Ingolstadt in Germany great talk Niels thank you very much I wanted to ask about your alternative policy I always thought that one main channel that automatic exchange of information is working is not only that tax authorities get the information but also the tax evaders fear that they might be using this information and with a higher detection probability are more likely to declare their income now if we have banks collect the tax and remit it we really have to trust that the banks are doing because the second channel is going away so I was wondering if you have any thoughts on the quality of the work banks and tax havens are actually doing so how good is the information and how much would you trust them to collect the withholding tax we'll take two more questions now the gentleman mayor and then the gentleman in the very front yes so this is the German corner here I'm Christian von Halmann from the German Institute of Development and Sustainability I just wanted to ask you are you planning to develop perhaps a more diversified set of country categories because you are now talking about developed and developing countries which are groups that hides essential heterogeneity and the question would be are you thinking about you know being more specific with regard to smaller and more accurate perhaps groups of countries thank you thank you very much I'm from South Africa but I'm also director of United Nations University maybe this is just not directly related to your presentation last week I was reading on financial times and they were saying that there is a fight for control of tax policies by the United Nations and the OECD is this something that we should be worried about and what are some of the implications of these multiple policies that potentially are there do they do they create opportunities for tax evaders to do their jobs you know or bad jobs you know of evading tax thank you over to you okay so let me just have a Dominicus question so if I hear you correctly you are saying that if I'm an offshore evader so there's always a risk that banks don't do the job they're supposed to do but if I'm an offshore evader I might be I don't know whether my bank will or not do the job well and just because I don't know then I'll be compliant whereas in the regime that I was kind of suggesting I'm just taking my chances and if they do their job I'll pay a tax but if not then I'm off the hook I think that's right that kind of the deterrence effect disappears with the deterrence regime so that's probably another con then so then you really rely even more on each bank in the world to really do exactly what they're supposed to do but you know I think even with the existing regime I don't think anyone has really showed that but you still rely a lot on banks to do exactly what they're supposed to do and even if there's one or two banks that don't choose not to do it well then I think there's a real fear that you can get this selection of die-hard tax evaders into those banks that kind of the rumors will spread that these guys this bank over here should do and that's why I moved my account over there so I think in any case we rely a lot on banks nowadays to kind of dig out information for us I'm not sure that we do enough to really like to make sure that they do I don't know of any audits of banks or like any systematic control of banks I have some work in Denmark where we actually we try to speak a bit to this question about like whether banks actually kind of send out the reports they're supposed to do so using money transfer data we can basically kind of identify a sample of people who seem to hold foreign accounts and we then check how many of them actually get a serious report then and it's not everybody so there's clearly kind of also holes in the current serious coverage but I think that challenge is really there like no matter what regime you go for so there's a question about like whether I should use a different typology of countries I guess or different grouping of countries so now I'm just basically I don't even in the data work I don't even like make any thresholds distinguishing developing and developed countries that's probably also meaningful meaningless so what I'm doing is just basically correlating all these these outcomes with with the income like per capita income levels and of course you could have like a different a different measure of development I think at the bottom level I think you are completely right that there's a lot of both among developing and developed countries so the dimension I'm particularly interested in here maybe is really you know how good is the tax administration how many resources do they have how good are they at incorporating you know foreign data sets into their tax control I guess that there will be a development gradient in that that measure but I'm actually not sure like so in there are some fields where developing countries have better data and do more to collect data than developed countries so VAT for example like I think is an example of you know where you actually have like much more granular and detailed data in some developing countries so this is by no means kind of a one-to-one correlation with per capita income so I'm just not sure like how exactly to do this if you have any ideas of like specific ways of slicing the sample I'll be happy to hear that and then the last question about so like who actually to whom should we delegate this job of like designing global policies in this field and you know I think like honestly I think that the OCD has been doing a good job like so they really managed to bring us to a place now that no one had hoped I think ten years ago that we would be but it's probably also right that they are I mean it is like as a starting point like a place where developed countries meet and discuss solutions to their policy problems and probably there's not been enough of an year to kind of the needs of developing countries and I think there's absolutely an argument for like saying like where is like the most legitimate kind of global form that probably is the UN so like that will make it a natural place to place these policy developments and then of course there's also some dependency here you also maybe you're worried that there's a lot of you know just like skill and expertise and experience at OCD that you might lose if you just move everything to the next level and so I don't have like a definitive answer but I totally see like where you're going. Thank you. Next round of questions. Okay. Yeah. Start with the lady on your left and then take the lady on your right and then at the back the gentleman that's the next three questions. Thank you. Thank you very much for that very stimulating presentation on tax heavens. Okay. So, my question is when we come to Africa in particular the amount of resources that come from Africa and banked probably in tax heavens like in Switzerland and not only of course by our own politicians but also a lot by the mining companies that extract a lot of natural resources from Africa and as we know today post the COVID pandemic and the deposition of a lot of African currencies our debt levels have grown for by more than 30% to 50% just because of the dollar being stronger and probably some of the money from those tax heavens would be sufficient to pay this debt and also for instance would be sufficient to improve the livelihoods of people in Africa. I did see them well there's a lot of concern about development I mean that's why we are here we're talking about development in Africa of multilateral loans there's a lot of grants how can you supporters to get this money back to the continent and I did see one of the policy initiatives you mentioned was the EU trying to get with holding tax on the interest and from the money that is held in these tax heavens I mean that would be a good start and for instance to be sufficient to pay for social support I don't know what kind of initiative or how we can incentivize you to support us in this because this money is in the west. Thank you. Thank you Niels for this very interesting presentation really thought provoking Angelica Del Global Forum on transparency and exchange of information I was thinking about your proposal and I wanted to ask you a question which maybe a bit provocative or maybe just lead you to a more nuanced conclusion here because what we are talking here at this conference is about revenue for development I can see where you're coming from in saying in short term that will generate revenues but how would you evaluate your proposal in the context of what is a bigger thing here it's development because a longer way of making sure that the differences in capacities between developed and developing countries in terms of tax administration and saying what we are trying to achieve is to work with developing countries to make sure that their tax administration is up to speed and being able to utilize that information would that come on the corporate tax umbrella or on the personal income tax umbrella is long term a better solution for development rather than a better solution. Hello. Thank you very much for an excellent presentation. Just a few follow up on I was just wondering on your axis I assume that when you're comparing wealth you were looking at absolute or was it the relative rather because there's been quite a lot of research showing that if you look at the relative numbers then the development gradient is present. I'm just wondering what you were concluding something different that was the first one and the second one is that I assume also that the wealth composition could be different between countries both offshore and domestic and also between different type of countries and this would affect a bit the results that you're having and I would also have a question a bit on whether you are covering through your data all about financial instruments because as we know there has been a huge growth in options for example certain financial instruments that might also I don't have exact knowledge on this but that is outnumbering in totals by far traditional bank or financial deposit so I'm just wondering whether you see that also in the Bank of International Settlements data and when you're capturing this when you're looking at it and then finally it would be interesting like the German colleague was saying here also to have a decomposition by region so sub-Saharan Africa perhaps by resource rich countries a dependent countries and FDI and different categories to really get a more nuanced picture of what is happening, thanks. We'll let you answer now. Yeah, there was multiple questions each with multiple soft questions like let's see if I can remember all of it but the first question I guess was about mining or taxation of natural resources and I think you are totally right that even so public finance theory would tell you that the pure rent from mining or other natural resources should be taxed basically at 100% so there's no reason why at developing countries with these resources would kind of give up some of the pure rent to most national firms who are doing the mining so of course you, yeah. And the question is how do we get there and this is exactly like what all these policies about like how to kind of enable countries to make sure that both the profits that is generated in the country is taxed at the rate that the country chooses and also that the wealth of the people living in the country is being taxed in this country at the rate that the country chooses so I think all these policies are about getting where you want to go to a place where rents and wealth can be taxed where it should be taxed and I think history tells us that there's no easy fix here so it's exactly like about improving designs and also adjusting them maybe to the specific needs of specific countries to get as close to where you want to go as possible so yeah, the world is an imperfect place I'm sorry so to Angela's question so the way I understand it and there's something we discussed yesterday also like at lunch which is like maybe information change is important like automatic information change is important in the way it's being done right now not just because it brings in some revenues to the countries who receive this information and use it in the right way but also because it becomes like a way to practice also there was indeed a lot of effort to actually build capacity in countries that are not so so many resources that can actually spill over into domestic taxation maybe once you have learned to handle all this foreign information it becomes better at getting information from domestic banks about domestic assets or it can kind of trickle through the taxation administrations and actually help them address much more important problems than just offshore evasion and I think there's a theoretical argument for that I would love to I think this is a potentially super important story that I would like to know more about but I just don't know in practice whether it's true or not I'd also like to talk to you about this hypothesis if you have some opinions and and then the last question was more about some of the methodologies or so I'm the first to concede that these data sources are imperfect and the BIS data is only deposits so it doesn't have securities it doesn't have stocks and bonds in real estate so it is really like a very narrow asset class I think maybe where I don't agree with you is that it's obvious that the gradient would go the other way or be very strong if you had better data I've really tried to dig out what I could and the second measure should try to account for other financial assets to the extent possible probably not stock options but I'm not sure how important that is so if you have ideas for better data or ways to measure this in a different and better way I'm all ears but I think it's not obvious that there's a very strong development gradient once you do things with improved methods and data if I can just the last question about like I like the suggestions for different groupings of countries for example but I mean so resource reliance is I think will be very important it's a I have worked myself like showing that you know when countries have like oil price shock so they suddenly have a bigger resource rent then some of that money shows up on offshore accounts so I think you would find that resource rich countries just on average have more assets offshore thank you so we can only take short question now so we take two more short questions because we're actually running a bit out of time otherwise so oh no you're not making this easy for me so so I'll take the question here from the lady in the front Ellen and then for gender balance one question from male colleague I think you have had a lot of questions so we'll do that and everyone else please feel free to find a seat next to Niels for lunch I'm giving away your lunch date that's fine I'm happy to thank you so much for the great presentation my name is Aline from Uganda in my view automatic exchange of information is really the way to go yes we'll struggle to kind of identify any gaps but I feel gradually to become easier and we can actually help out each other as a bloc developing countries or maybe Africa and see how to utilize this data grow data analytics to kind of find the gaps I feel that would be a better alternative in the long run thank you so much there was a comment not a question is that right yeah good right Peter from Nurad as you mentioned there are some policy changes that I have recently taken place that creates questions about where are we now in the issue of offshore tax evasion and when you have these numbers about offshore wealth then there's some assumptions behind what sort of obstacles stand between tax authorities and the correct taxation of offshore wealth the key focus has been the obstacle of information but actually tax havens offer a variety of obstacles for instance they can create legal ambiguity about who have the right to tax this wealth or is it possible to tax it at all and I think now we're at the point where so much information is being exchanged that you can say that almost all the offshore wealth is perhaps captured in some way in the information exchange system but we still know very little about whether this is accessible in a legal way to tax authorities and this creates a risk that we're really speaking past each other on whether or not we have sort of solved this problem or not and so I just wanted to make you reflect a little bit on that and also maybe perhaps ask the global forum what can be done in terms of getting taxed authorities to report back on okay you get all this information how much of it is actually legally easy for you to use or is it in trusts or in all kinds of legal systems that actually make it really hard to just tax it yeah I think you're totally right that there are still issues along these lines I think the current policy design does a lot I think that's also to try to look through all these financial structures and holding structures and trust and so on I think we are trying so there's another issue who actually has the taxing right and I think it's a real problem that you know the very wealthiest people like the ones that we really want to tax well well they also have lifestyles where they probably have multiple residences and so on and Dominica has shown in her research that I mean some of these people they use this ambiguity like in a strategic way but basically obtaining golden passports in places where they don't enforce taxes so much and so they're clearly challenges along these lines too but that said I mean so like information exchange really I mean it must be a step forward and it's imperfect and we're still learning to use the information better but maybe there are solutions to the problems you point to like a bit down the road but we have to start somewhere and I think in a way we have I think come a pretty long way already Thank you everybody also for all these questions and comments at this point it's time for me to pass over to for now but before I do say a big thank you to you for the keynote but also for picking up all the questions and the sub-questions and please forgive me that I gave away your lunch days