TheMarketfor TaxHavens March2024

To circumvent potential endogeneity, I predict the level of taxation in a country using changes in the level of democracy and in the ideology of the head of government. [...] The history of the British Virgin Islands, especially the International Business Companies Act of 1984, has proven the profound role of IBCs in the transformation of the island and other countries into tax havens. [...] 3.1 The long-run development of tax havens I first document the striking increase in the number of tax havens in the 20th century. [...] The size of the market for tax havens What is the impact of the increase in the number of tax havens on the size of the global market for offshore services? We already know from the previous section that this increase is linked to an increase in the provi- sion of offshore services in the countries that introduce new reforms. [...] This increase in the provision of services can be at the expense of the tax havens already supplying the market or can expand the size of the market.