Search results

1 – 10 of over 4000
To view the access options for this content please click here
Article
Publication date: 14 May 2018

Peter Yeoh

This paper aims to examine tax leakages in secrecy financial centres.

Abstract

Purpose

This paper aims to examine tax leakages in secrecy financial centres.

Design/methodology/approach

This qualitative study relies on primary data from relevant statutes and secondary data from the public domain and in particular academic sources. The study makes concurrent use of the case study approach.

Findings

The study reinforces existing suggestions that tax evasion is significantly widespread from advanced to emerging economies. It also suggests serious enforcement difficulties because of light-touch surveillance among competing tax havens and financial professionals. Further, while relevant laws are in place to deal with illicit activities, enhanced transparency is needed to quell the problem and, in this instance, public access to beneficial owner data such as exemplified by UK’s public registry approach. The US Foreign Account Tax Compliance Act is proving to be effective, and similar expectations are raised for the equivalent the Organisation for Economic Co-Operation and Development initiative from 2017 onwards.

Research limitations/implications

The paper is constrained with the general limitations associated with qualitative studies. These are, however, mitigated by triangulations of perspectives and so on.

Practical implications

The findings have implications for policymakers and the business community.

Social implications

The findings could help to narrow inequality gaps between and within economies.

Originality/value

The paper combines insights from high-profile cases with those from academic sources. The analysis is also undertaken from the combined perspectives of law, economics and accounting. It also focuses in secrecy issues in both offshore and onshore financial centres.

Details

International Journal of Law and Management, vol. 60 no. 3
Type: Research Article
ISSN: 1754-243X

Keywords

To view the access options for this content please click here
Article
Publication date: 18 May 2021

Kalle Johannes Rose

Recent research shows that financial institutions in the European Union (EU) close branches, offices and correspondent connections to jurisdictions with less transparency…

Abstract

Purpose

Recent research shows that financial institutions in the European Union (EU) close branches, offices and correspondent connections to jurisdictions with less transparency due to possible sanctions related to the increase in EU money laundering regulation. This tendency is called de-risking and the purpose of this paper is to analyze whether the recent regulatory approach towards money laundering in the EU limits the incentive to have operations in tax havens.

Design/methodology/approach

This paper follows a functional approach to law and economics.

Findings

The paper finds that recent EU money laundering regulation increase an incentive for financial institutions to limit any connection to jurisdictions known as tax havens, where transparency is at minimum. Thereby, it can be discussed whether the spillover effect from money laundering regulation in to the fight of tax avoidance could support further regulatory interference.

Originality/value

The recent trend of de-risking in light of money laundering regulation is scarcely covered by present research. Furthermore, there has been no linking of this de-risking tendency and the effects or relation to the use of tax havens/low tax jurisdictions.

Details

Journal of Financial Crime, vol. ahead-of-print no. ahead-of-print
Type: Research Article
ISSN: 1359-0790

Keywords

To view the access options for this content please click here
Article
Publication date: 10 May 2011

John Christensen

The purpose of this paper is to consider the activities of tax havens in the global financial markets and explore their role in providing a supply‐side stimulant for…

Downloads
7261

Abstract

Purpose

The purpose of this paper is to consider the activities of tax havens in the global financial markets and explore their role in providing a supply‐side stimulant for corrupt practices. It aims to argue that the corruption debate needs to shift to a second phase in which the role of tax havens as supply‐side stimulants features more prominently.

Design/methodology/approach

Based on the author's original research into the practices and activities of tax havens, the paper explores the operational features of tax havens, with particular focus on their role in providing opaque and complex offshore structures through which illicit financial flows can be routed to disguise their origins, method of transfer and true beneficial ownership. The paper explores how bankers, lawyers and accountants create complex and opaque offshore structures to facilitate economic crime and impede investigation.

Findings

Despite severe limitations imposed by the absence of rigorously researched statistical data on capital flows into and out of tax havens, the paper argues that the available data support the view that tax havens have become prominent features of the globalised capital markets, and their activities create a criminogenic environment in which illicit financial flows are easily disguised and hidden amongst legitimate commercial transactions. The paper notes that effective remedies are available to reduce financial market opacity, but political will is lacking to take effective action.

Originality/value

This paper tackles a new and under‐researched subject. Drawing on the author's experiences of working on a prominent tax haven for a total of 14 years, the paper brings attention to the impact of tax havens on international development.

Details

Critical perspectives on international business, vol. 7 no. 2
Type: Research Article
ISSN: 1742-2043

Keywords

To view the access options for this content please click here
Article
Publication date: 13 February 2017

Akanksha Jalan and R. Vaidyanathan

This paper is an effort to demystify tax havens – what they mean, what they offer and why they are harmful. It offers a detailed analysis of abusive tax planning by…

Downloads
4111

Abstract

Purpose

This paper is an effort to demystify tax havens – what they mean, what they offer and why they are harmful. It offers a detailed analysis of abusive tax planning by multinational corporations, involving the use of tax havens, shedding light on how corporations use “egregious” tax-sheltering techniques right from their incorporation to avoid payment of income taxes. The paper also discusses global efforts against the phenomenon and policy recommendations.

Design/methodology/approach

The paper brings together definitions from various sources to accurately define and identify tax haven economies. The key contribution of the paper is to diagrammatically explain the use of tax havens by MNCs right from the time they are incorporated. It explains how every big and small corporate decision is motivated by the desire to save taxes and how tax havens come in handy for such corporations.

Findings

This paper finds that base erosion and profit shifting (BEPS) is a pervasive phenomenon, largely due to the suppliers of tax haven operations. Here, corporate decisions are divided into strategic and operational and further subdivided into investing, operating and financing activities, and provide real-life corporate examples of how tax havens fit into almost every corporate decision. This is the key contribution of the paper.

Research limitations/implications

This is a review paper that sums up knowledge about tax havens and their use by MNCs. It does not, however, use empirical data to corroborate its findings. It would be interesting to see empirically whether MNCs with greater tax haven operations actually have lower effective tax rates.

Practical implications

The paper can provide a framework for designing tax policies in a manner that geographical arbitrage can be minimized. It can enable formulation of the necessary incentive structures in the form of penalties, rewards and the like for both the users and providers of tax haven services to curb massive base and profit shifting out of high-tax countries.

Social implications

The paper is one small step in the direction of bringing about equality in tax payments, i.e. to align real tax systems with the canon of equality that Adam Smith once dreamt of. Taxes should be progressive in nature, implying that the amount of taxes paid should increase with one’s income. However, with the advent of offshore financial centres and egregious tax planning techniques, only the smaller corporations and middle-class individuals end up paying taxes, while the rich and bigger corporations get away easily.

Originality/value

The paper explores in detail the manner in which MNCs use, rather exploit, regulatory loopholes in tax systems of different countries to save on tax payments. By shifting their tax base from one country to another, MNCs not only hamper Treasury collections but also breed disrespect for the global tax system. The paper can help in designing tax laws in tune with such corporate motives.

Details

Journal of Financial Regulation and Compliance, vol. 25 no. 1
Type: Research Article
ISSN: 1358-1988

Keywords

To view the access options for this content please click here
Article
Publication date: 2 January 2009

Robert Thomas Kudrle

The purpose of this paper is to test the widely‐held assumption that blacklisting, such as that practiced by the Organization for Economic Cooperation and Development…

Downloads
1961

Abstract

Purpose

The purpose of this paper is to test the widely‐held assumption that blacklisting, such as that practiced by the Organization for Economic Cooperation and Development (OECD) and the Financial Action Task Force (FATF), affects the volume of financial activity associated with a tax haven.

Design/methodology/approach

ARIMA (autoregressive integrated moving average) analysis is used to explore changes across eight measures of in banking‐associated activity that occurred when a tax haven was placed on, or removed from, one FATF and two OECD blacklists.

Findings

The results are highly varied. Most importantly, no substantial and consistent impact of blacklisting on banking investment in and out of the tax havens was found across 38 jurisdictions.

Practical implications

The role of “speech acts” – unconnected with other developments in the havens or foreign actions beyond rhetoric – may not be as important for tax haven investment as previously thought.

Originality/value

No rigorous and comprehensive study has previously been done of this important question.

Details

Journal of Money Laundering Control, vol. 12 no. 1
Type: Research Article
ISSN: 1368-5201

Keywords

To view the access options for this content please click here
Article
Publication date: 21 June 2021

Olatunde Julius Otusanya and Gbadegesin Babatunde Adeyeye

This paper aims to assess the role of secrecy jurisdictions in providing supply-side stimulants for illicit financial flows from developing countries and how the tax havens

Abstract

Purpose

This paper aims to assess the role of secrecy jurisdictions in providing supply-side stimulants for illicit financial flows from developing countries and how the tax havens structures shape the role of actors. Specifically focussing on decades of trade liberalisation and markets, and of increasingly rapid movement of people, capital and information across regions and around the globe, the paper draws on the political economy theory of globalisation to illuminate the connections between capital flight, money laundering and global offshore financial centres (OFCs).

Design/methodology/approach

The paper uses publicly available evidence to shed light on the role played by tax havens in facilitating money laundering, capital flight and corruption. The issues are illustrated with the aid of case studies.

Findings

The evidence shows that, in pursuit of organisational and personal interest, the tax havens create enabling structures that support illicit activities of the political and economic elites from developing countries. The paper further argues that the supply-side of corruption severely limits the possibilities of preventing corruption in developing countries.

Research limitations/implications

The paper uses publicly available evidence to illuminate the role played by OFCs in facilitating elite corruption and money laundering practices.

Practical implications

It is impossible to quantify the volume of money laundered, but it has been estimated that money laundering may account for as much as 5% of the world economy.

Social implications

The paper, therefore, suggests that unless this supply-side of corruption is tackled there is little prospect for an end to aid dependency and the creation of economically stable and democratic states in developing countries.

Originality/value

The paper examines predatory practices of the international financial industry in tax havens and OFCs in facilitating money laundering, corruption and capital flight and the challenges posed for the economic development of developing countries.

Details

Journal of Financial Crime, vol. ahead-of-print no. ahead-of-print
Type: Research Article
ISSN: 1359-0790

Keywords

To view the access options for this content please click here
Article
Publication date: 5 July 2021

Cornelia Agyenim-Boateng

The study is intended to identify the macroeconomic factors that drive the use of companies registered in tax havens to purchase properties in the UK housing market.

Abstract

Purpose

The study is intended to identify the macroeconomic factors that drive the use of companies registered in tax havens to purchase properties in the UK housing market.

Design/methodology/approach

Adopts an empirical study that uses Cointegration and Vector Autoregressive models to identify the influence or the motivations of using tax havens regime and its relationship with investment volume by analysing impulse responses of innovations to external and domestic factors.

Findings

The model uses monthly data for the period 1996–2019. This provides sufficient evidence that offshore buyers are particularly motivated by exchange values and the quality of governance in host economies.

Research limitations/implications

There is much to be revealed from the spatial distribution of this phenomena and the welfare effect at the micro-level.

Originality/value

To the best of my knowledge there is limited to no empirical study that primarily focus on the use of tax haven as an offshore investment tool in the UK housing market. The study also uses new dataset, Overseas Companies Ownership Dataset in the UK to understand housing ownership patterns by companies that are registered abroad dubbed, offshore buyers.

Details

Journal of Economic Studies, vol. ahead-of-print no. ahead-of-print
Type: Research Article
ISSN: 0144-3585

Keywords

To view the access options for this content please click here
Article
Publication date: 16 October 2007

M. Michelle Gallant

This paper has the purpose of being a preliminary exploration of the link between taxation and the contemporary assault on the financial aspect of terrorism.

Downloads
1472

Abstract

Purpose

This paper has the purpose of being a preliminary exploration of the link between taxation and the contemporary assault on the financial aspect of terrorism.

Design/methodology/approach

This is a discussion paper.

Findings

Locating the origins of the link in the terrorist attacks of September 2001, it considers the ramifications of the fusion of taxation and international tax havens with terrorist finance.

Originality/value

The paper considers the link between taxation and the financial aspect of terrorism.

Details

Journal of Financial Crime, vol. 14 no. 4
Type: Research Article
ISSN: 1359-0790

Keywords

To view the access options for this content please click here
Article
Publication date: 1 December 2020

Mukesh Garg, Mehdi Khedmati, Fanjie Meng and Prabanga Thoradeniya

The purpose of this paper is to examine whether the quality of management can mitigate the positive association between corporate tax avoidance and firm-specific stock…

Abstract

Purpose

The purpose of this paper is to examine whether the quality of management can mitigate the positive association between corporate tax avoidance and firm-specific stock price crash risk (SPCR).

Design/methodology/approach

The study is based on data from the Center for Research in Security Prices (CRSP), Compustat and ExecuComp and focuses on US-listed firms from 1980 to 2016. The authors employ ordinary least squares (OLS) regression as the baseline methodology and use five measures of tax avoidance and three measures of SPCR. Propensity score matching (PSM) and two-stage least squares methodologies are employed to address endogeneity concerns.

Findings

The authors find that more able managers weaken the positive relationship between tax avoidance and SPCR. The results suggest that the benefits of efficient tax management are more likely in firms with a more able management team as the likelihood of SPCR due to tax avoidance practices is reduced in such firms.

Practical implications

This study has important practical implications for investors who are concerned about firms that engage in tax planning activities that can reduce corporate taxes, but at the same time increase the SPCR. Considering the compelling arguments and the “dark” side of more able managers who may engage in opportunistic behaviour, the study provides useful evidence in support of more able managers.

Originality/value

This paper contributes to the SPCR literature by examining the effect of managerial ability on the likelihood of tax avoidance causing SPCR. Able managers are likely to lower the risk faced by investors and are less likely to extract rent and manipulate information. Therefore, the findings of this study have implications for investors by informing them of the negative value implications of tax avoidance and how they can be mitigated by hiring more able managers.

Details

International Journal of Managerial Finance, vol. ahead-of-print no. ahead-of-print
Type: Research Article
ISSN: 1743-9132

Keywords

To view the access options for this content please click here
Article
Publication date: 1 December 2002

Jackie Johnson

Offshore financial centres (OFCs) have again come under the spotlight. They have been accused of aiding terrorists by laundering their financial resources, allowing the…

Abstract

Offshore financial centres (OFCs) have again come under the spotlight. They have been accused of aiding terrorists by laundering their financial resources, allowing the funding of terrorism to go undetected. Their role as tax havens have also been highlighted in the collapse of Enron, a company that used OFCs to avoid paying millions of dollars in US tax. In response many OFCs have agreed to freeze terrorists’ assets, tighten money laundering legislation, provide a more open tax system and share information. There are, however, some OFCs that are resisting the mounting pressure to conform to international standards. These will become targets once more in June, 2002, when the Financial Action Task Force starts the process of identifying jurisdictions that ‘lack appropriate measures to combat terrorist financing’.

Details

Journal of Financial Regulation and Compliance, vol. 10 no. 4
Type: Research Article
ISSN: 1358-1988

Keywords

1 – 10 of over 4000