Reputations and the fight against tax evasion: EU pressure and Asian financial centres

This article examines an important dimension of how states influence each other: by damaging or tarnishing their reputations. It illustrates this form of reputational pressure by analysing the European Union's (EU) efforts to combat tax evasion in Asian financial centres. The aim is to understand changes in the EU's approach to preventing EU-domiciled high net worth individuals (HNWIs) from hiding their wealth in Hong Kong and Singapore, Asia's most important financial centres. The article finds that the deliberate deployment of reputational pressure plays a major role in accounting for the isomorphist tendencies of the regulatory architecture governing tax evasion and harmful tax competition. It contextualizes the evolving anti-tax evasion regulatory regime in the EU and tracks its influence on Hong Kong and Singapore. The crackdown on tax evasion has made it more difficult for both cities not to comply with EU regulatory preferences without suffering major reputational damage. The article suggests that the EU and member states have been successful in pressuring Asian financial centres into higher degrees of regulatory compliance.