Proceedings of 21st International Business Research Conference
Proceedings of 21st International Business Research Conference
10 - 11 June, 2013, Ryerson University, Toronto, Canada, ISBN: 978-1-922069-25-2
An Unstoppable Force Rather Than an Illegitimate Farce:
Exploring the Role of Offshore Financial Centres amid
Renewed Criticism
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 taxdriven. 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 , Australia.
