The effects of trade liberalization on tax avoidance

Does trade liberalization aggravate tax avoidance? We build a three-country model of competition consisting two nonhaven countries and one haven in which goods are traded between the nonhavens firms may shift profits to haven. When cooperate, reduction costs does not change degree avoidance. In contrast, when do equilibrium rates become higher, resulting more Furthermore, strengthens nonhavens, further increases tax-avoidance activities.