UK, Netherlands Biggest 'Conduits' For Offshore Investment

by Amanda Banks, Tax-News.com, London

26 July 2017

Researchers at the University of Amsterdam have looked at how corporations make use of particular countries and jurisdictions to minimize their tax liabilities.

The researchers employed a data-driven approach to identify those countries that function as conduits for financial flows from or to low-tax financial centers, and also proposed how to define "offshore financial centers."

The research found that five large countries – the Netherlands, the UK, Switzerland, Singapore, and Ireland – are most used by corporations to access low-tax financial centers. These territories are being used as intermediate destinations, the report say, while the British Virgin Islands, Hong Kong, and Jersey were deemed to be the largest three "offshore financial centers" in terms of investment flows.

"Our results show that offshore finance is not the exclusive business of exotic small islands far away," the research said. "Countries such as the Netherlands and the United Kingdom play a crucial yet previously hidden role as conduits of offshore finance on its way to 'tax havens.'"

It proposes a change in direction from international organizations seeking to clamp down on tax avoidance and evasion towards challenging these higher tax, onshore territories.

"While new territories with low or no corporate taxes are continuously emerging – the conditions for conduit-OFCs (numerous tax treaties, strong legal systems, good reputation) can only be found in a few countries," the report concluded.

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