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Moreover, within developed nations there exist numerous tax incentives for which the

entire

purpose

is,

precisely

as

offshore

centers,

to

attract

capital

investment8.

It

is

generally accepted within the international society that sovereign states will adopt fiscal

policies that do not impede or obstruct the entrepreneurial spirit. Hence, the assertion

made by the report that countries with no or nominal taxation are a threat to the

sustainable development of its members does not address the underlying issue which can

be placed in the form of a question: Why are countries offering offshore investments

attractive? It is this basic question, inter alia, that will be addressed. It is interesting that

the OECD and its members have suggested that the purposes are solely to evade taxes

and protect illicit profits through a web of bank secrecy and confidentiality.

However, in defense of the Offshore Centers numerous measures have been undertaken

by several of the leading centers in order to avoid the dubious connotation that offshore

denotes sham type of banking. Indeed, centers such as the Bahamas, Cayman and

Bermuda arguably are better regulated and are much more sophisticated centers of

financial excellence than some of the members of the OECD such as Turkey, Poland and

Czech Republic.

8 See generally the tax breaks afforded to Puerto Rico, U.S. Virgin Islands and Delaware: with reference to the Puerto Rico the provisions of section 936 of the Internal Revenue Code allows substantive tax credits to domestic corporations.

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