Offshore financial center
In most cases, the term offshore financial center (literally for offshore financial center , financial center beyond the coast ) sites, which are characterized by low taxes , a high level of confidentiality and privacy (no sharing of information on financial transactions and ownership) and a minimal financial market supervision and - regulation excel (not to be confused with tax haven ). Resident banks and other financial institutions conduct a large part of their business abroad and the transactions and investment sums are extremely large compared to the sales volume of the local real economy.
Many offshore financial centers are located on small islands. Most of them are former British colonies or dependencies, which is where the name originally comes from (translated as beyond the coastal region , i.e. lying in international waters). However, in this context, offshore is not to be understood geographically, but rather in legal terms: the financial centers are outside the usual legal norms .
Important location factors in offshore centers are low or no taxes, a low level of regulation, good banking secrecy , a relatively high level of education , little corruption , legal security and political stability.
The financial sector is the dominant factor in offshore financial centers, at least in terms of external impact. Located are banks , insurance companies (for example, captive insurance ) as well as trusts or funds for asset management . Onshore companies also set up companies that handle parts of their business, for example to reduce liability risks, but also to conceal criminal activities and minimize tax payments.
There are also private individuals who manage assets in offshore financial centers, mostly with the aim of avoiding the higher tax rates in their home countries. The legal security and stability of the locations is high compared to many emerging and developing countries , which means that wealthy private individuals and companies often manage their finances here.
According to estimates by the OECD, around six to eight percent of global assets are managed in offshore locations.
However, the economic structure of the various locations differs greatly. While Vanuatu, for example, corresponds to the cliché of a tax haven with a high proportion of letterbox companies (see also letterbox bank) and few material business activities taking place there, locations such as Luxembourg (after Switzerland one of the larger centers of private banks in Europe) or Bermuda (especially in the area Reinsurance active) meanwhile complex locations that have formed important clusters in their markets .
A neglected area of business activities in offshore locations is the registration of ships ( Panama , Bahamas ) and aircraft ( Bermuda , Cayman Islands ). In the case of ships, circumvention of labor regulations plays a major role. Aircraft are registered in offshore locations when airlines from developing or emerging countries need neutral ground in order to work with banks from developed countries on financing.
Problems of offshore financial centers
Proponents of offshore financial centers emphasize their important role in the international monetary system, in which their liberal laws allow the development of special instruments, for example for risk management . They are also important as regulators that prevent governments from raising taxes too high.
Offshore financial centers are criticized primarily as tax havens, which, in combination with their rigid banking secrecy, favor tax evasion in other countries. The NGO Tax Justice Network estimates the tax revenue lost through offshore financial centers at around US $ 255 billion per year worldwide. The tax revenue lost to the US in this way is estimated at around US $ 70 billion.
The lack of transparency is also problematic in connection with money laundering activities that are promoted by this. According to an estimate by the IMF, between two and five percent of GNP is washed annually .
In addition, the financial centers have come under fire for their poor financial supervision, as many experts believe that they endanger the stability of the financial market . Well-known examples are the bankruptcies of Meridian International Bank in 1995 or the collapse of the Bank of Credit and Commerce International (BCCI). Offshore financial centers are also assigned an important role in the emergence of the various currency crises of the 1990s.
In response to the various problems facing offshore financial centers, the OECD launched three initiatives at the end of the 1990s:
- the Financial Stability Forum (FSF), which primarily deals with the dangers of financial centers for the stability of the global financial system
- the Financial Action Task Force on Money Laundering (FATF), which tries to prevent money laundering in the locations (since 2001 also increasingly the financing of terrorist organizations)
- the harmful tax initiative , which deals with the negative consequences of tax evasion and opportunities for cooperation between industrialized countries and offshore financial centers.
In a report from 2000, the Financial Stability Forum differentiated 42 offshore financial centers into three categories:
- I .: Places that, relative to their size, have a good infrastructure, solid legislation and work relatively well with international institutions. These included:
- Hong Kong , Luxembourg , Switzerland and Singapore . However, Guernsey , Isle of Man , Jersey and the Republic of Ireland come at least close to these standards .
- II .: Although the level of legal regulations in this category is higher than in the third group, they are nevertheless characterized as more problematic than the countries in the first group. These countries include:
- III .: The infrastructure, legal regulations and cooperation with international institutions are least developed in this group. This group includes:
- Anguilla , Antigua and Barbuda , Aruba , the Bahamas , Belize , British Virgin Islands , the Cook Islands , Costa Rica , the Cayman Islands , Lebanon , Liechtenstein , the Marshall Islands , Mauritius , Nauru , the Netherlands Antilles , Niue , Panama , St. Kitts and Nevis , St. Lucia , St. Vincent and the Grenadines , Samoa , the Seychelles , the Turks and Caicos Islands , Vanuatu and the Republic of Cyprus .
The FATF also published a list of countries that, from the organization's perspective, were not cooperative in the fight against money laundering. A total of 23 countries were identified as problematic:
- Egypt , Bahamas, Cook Islands, Dominica , Grenada , Guatemala , Indonesia , Israel , Cayman Islands, Lebanon, Liechtenstein, Marshall Islands, Myanmar , Nauru, Nigeria , Niue, Panama, Philippines , Russia , St. Kitts and Nevis, St. Vincent and the Grenadines , Ukraine and Hungary (blue letters: countries that are not on the FSF list).
Countries named on these lists were subject to special regulations. For example, business with banks in OECD countries was often no longer allowed. The lists are now seen as a success: the FSF withdrew its list in 2005; On October 13, 2006, the FATF became the last country to remove Myanmar from its list.
The offshore centers responded to the new policy not only with better regulations. Some countries saw the cost of customizing their systems as too high and withdrew from the offshore banking business. These were Nauru , Niue and Tonga . Other countries suffered significant losses from the introduction of new regulatory mechanisms. After Vanuatu required banks to offer at least one full-time job, the number of banks dropped from 35 to 7.
Information on the harmful tax initiative : see tax haven .
In addition to attempts by the state, there are also initiatives by various NGOs with the aim of regulating offshore locations more effectively. The Tax Justice Network , which deals exclusively with tax evasion , should be mentioned in particular. Even Oxfam is involved in the field of tax evasion. Attac is prominent in Germany . Here, too, the focus is on tax evasion.
In the so-called offshore leak in April 2013, the international media reported a data set with 130,000 names of people who are said to have invested their assets in tax havens . In April 2016, numerous names from the Panama Papers of the Panamanian offshore service provider Mossack Fonseca , which helped found over 214,000 letterbox companies in 21 tax havens, were made public by several international media .
- Tax Justice Network
- Finance Watch
- Weed - W orld E conomy, E cology & D evelopment
- Global Finance Integrity
- Dharmapala, Dhammika and Hines Jr., James R. (2006) Which Countries Become Tax Havens?
- The Economist (2007) Places in the sun
- The Economist (2007) What it takes to succeed
- TJN (2005) The Price of Offshore (PDF; 36 kB)
- BMF (2003) Monthly Report No. 8,
- IMF (2000) Offshore Financial Centers - The role of the IMF
- FSF (2000) Press release: Financial Stability Forum Releases Grouping of Offshore Financial Centers (OFCs) to Assist in Setting Priorities for Assessment ( Memento of October 8, 2007 in the Internet Archive )
- FATF (undated) Non-Cooperative Countries and Territories: Timeline
- Süddeutsche Zeitung : Sueddeutsche: Secret business in tax havens exposed from April 4, 2013