Revenue Sharing and Information Exchange under Non-Discriminatory Taxation

M. Keen, J.E. Ligthart

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The international exchange of tax information, and its merits compared to withholding taxes, is the central topic in current debates in international tax policy.The purpose of this paper is to characterize and compare the tax regimes that emerge with and without information exchange, under the assumption that countries are unable to differentiate between the taxes they apply to residents and non-residents.It focuses in particular on the role of asymmetries in country size (capturing a key feature of tax havens) and on the impact and potential desirability of schemes to share the revenue raised by withholding (as under the new EU savings tax arrangements) or (more innovatively) as a consequence of information exchange.It is shown that (irrespective of country size difference) Pareto efficiency requires that all revenue collected from nonresidents be transferred to the residence country which would require taking the EU practice even further from the norm, but is currently the norm in relation to information exchange.A withholding scheme with revenue fully reallocated in this way Pareto dominates information sharing, whatever the allocation under the latter. Comparing schemes in which there is no revenue sharing, however, shows that information exchange Pareto dominates simple withholding.
Original languageEnglish
Place of PublicationTilburg
Number of pages18
Publication statusPublished - 2005

Publication series

NameCentER Discussion Paper


  • revenue sharing
  • tax information exchange
  • tax competition
  • international tax evasion
  • withholding taxes


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