Proceedings of 5th Annual American Business Research Conference
6 - 7 June, 2013, Sheraton LaGuardia East Hotel, NY, USA, ISBN: 978-1-922069-24-5
An Unstoppable Force Rather Than an Illegitimate Farce:
Exploring the Role of Offshore Financial Centres amid
Renewed Criticism
Dr James Mcconvill
Offshore financial centres, or OFCs, are commonly labelled “tax
havens” due to the misconception that they are used solely to avoid or
evade tax. The British Virgin Islands (“BVI”) and Cyprus have been two
jurisdictions with an offshore financial industry that have been subjected
to particular criticism recently.
In early 2013, there were numerous reports that Cyprus is used mainly
by rich Russians to launder dirty money in local banks, and the
International Consortium of Investigative Journalists publicised results
of an investigation which suggested that the rich and famous (including
a number of prominent politicians in France and elsewhere) use BVI
companies to hide their financial interest in lucrative projects and
trading entities. This renewed attention towards the offshore world
follows on from attacks on OFCs during the global financial crisis, when
world leaders (in particular US President Barack Obama) came out
labelling OFCs as bad which have to be stopped in order to protect
dwindling government tax revenue.
The author worked for five years as a lawyer in the BVI, and also has
visited Cyprus twice in the past two years to interview leading lawyers
and members of the financial services industry. Accordingly, with
particular attention being given to the BVI (which remains the leading
centre for the incorporation of offshore companies) and Cyprus, this
presentation aims to debunk recently pronounced myths about the
offshore world by focusing on the practical reasons why OFCs are used
in international business, highlighting that the use of OFCs is not just
tax-driven. In fact, tax is just one of many reasons why structures utilise
products from OFCs. The author argues that OFCs are not simply “tax
havens”, but are a positive, unstoppable force.
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Dr James Mcconvill, Senior Lecturer, Victoria Law School, Melbourne
Consultant, Appleby