Taxes and Transnational Treaties

Responsive Regulation and the Reassertion of Offshore Sovereignty

Bibliographic Data

ID6090309
AuthorsGregory Rawlings (0000-0002-8047-9108, corresponding author)
Year2007
Volume29
Issue1
Pages51-66
Publication date2007-01-01
Open AccessYes
TypeARTICLE
VenueLaw & Policy (JOURNAL)
Journal identifiersISSN: 0265-8240 • E-ISSN: 1467-9930
PublisherWiley (PUBLISHER • GB)
DOI10.1111/j.1467-9930.2007.00245.x
OpenAlexW2025278934
LanguageEN
Citations received13
References cited16

Regulatory dialogue between states with widely diverging tax systems has emerged as a key feature of Organization for Economic Cooperation and Development (OECD), International Monetary Fund (IMF), and European Union (EU) initiatives on Offshore Finance Centers (OFCs) or tax havens. This has brought together states of differing dimensions in size, population, economy, and power. Where there is such a discrepancy in power between states there is often a temptation to assert a command‐and‐control regulatory approach. This was the initial reading of the OECD's Harmful Tax Practices Project that demanded tax havens—mostly small states in Europe, the Pacific, Indian Ocean, and the Caribbean—repeal financial secrecy legislation and commit to Tax Information Exchange Agreements (TIEAs). As these initiatives have unfolded there has been a transition away from regulation by command‐and‐control towards responsive regulatory dialogue in which tax havens have been encouraged to cooperate through engagement and active participation. Based on qualitative research with key stakeholders in OFC jurisdictions and multilateral organizations, this article explores this transition towards meta‐principles of responsive regulation. The preservation of tax bilateralism has limited the capacity of multilateral organizations to deploy the full range of regulatory techniques, particularly those involving penalty and coercion. Instead all parties, tax haven states and multilateral institutions alike, have been confined to the broadest base of the regulatory pyramid. Responsive regulation can end up having the opposite effect from what is intended where the enforcement peak of the regulatory pyramid is absent. This has resulted in strengthening the sovereignty of small OFC states and has increased international tax competition, rather than reduced it

Bilateralism · Business · Economics · European union · International economics · International taxation · International trade · Multilateralism · Political science · Public economics · Sovereignty · Tax avoidance · Tax competition · Tax haven · Tax reform · Corporate Taxation and Avoidance · Law · Regulation and Compliance Studies · Taxation and Compliance Studies

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