Niels Johannesen (Oxford, Saïd Bus. Sch.), Lauge Larsen (Danish Ministry Tax’n) & Nadine Riedel (U. Münster, Inst. Pub. & Regional Econ.), Does Global Financial Transparency Improve Tax Compliance in Developing Countries?, CESifo Working Paper No. 12747 (June 2026):

In a coordinated effort to curb tax evasion, governments systematically exchange information about bank accounts with foreign owners. We study the compliance effects of the policy in the context of South Africa using information reports on 1 million foreign bank accounts linked to income and audit data. We find that self-reported foreign income increased sharply and persistently at the onset of information exchange, but remained much below the true foreign income implied by the information reports [approximately half]. We explain the partial compliance response by showing that, contrary to standard theory of third-party reporting, the detection risk associated with non-compliance was modest.

From the conclusion:

The findings imply that automatic information exchange can have economically significant compliance effects in developing country contexts even if it only moderately raises detection risk for non-compliant taxpayers. This challenges the view that developing countries with limited administrative capacity do not benefit from automatic information exchange, which is relevant for the large number of low- and middle-income countries that have currently opted out of automatic information exchange.