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OFFSHORE FINANCIAL CENTRES (FUNCTION OF OFFSHORE FINANCIAL CENTRES (:star:…
OFFSHORE FINANCIAL CENTRES
COMMON REASON COUNTRIES SEEK TO DEVELOP THEMSELVES OF OFCs :black_flag:
May have little land base and few opportunities to develop other
types of economic activities
:<3: Limited energy supplies
:<3: Limited raw material & other natural resources
:<3: far from resource including raw material & energy
Possess natural features that makes it an
ideal OFC
:<3:political stabiliy
:<3:close geographically proximity to wealth coutries
:<3:well educated manpower & some natural amenities that could attract tourist
:<3:a political willingness o pass bank secrecy law & prepare to invest in policing & security infrastructure
TYPES OF INSTITUTIONS UNDER OFFSHORE FINANCIAL CENTRES
International Investment Bank
:explode: no minimum amount of deposits to be investment
:explode:Bank transaction may be tax-exempt (no taxt) under a favourable fiscal regime
:explode: may be free of interest and exchange controls
Offshore Bank
:check: subject to lesser form of regulatory scrutiny
:check:information disclosure requirements may not be rigorously applied
Offshore Corporations / International Business Corporaton (IBCs)
:recycle: use to own and operate businesses
:recycle:maybe set up with one director only
:recycle: in some cases- residents of OFC host country may act as nominee directors to conceal the identity of the true company directors
:recycle:in many OFCs, the costs of setting up IBCs are minimal & generally exempt from all taxes
Insurance Companies
:warning:commercial corporation establishes a captive insurance company in an OFC to manage risk and minimize taxes
:warning: onshore insurance company establishes a subsidiary in an OFC to reinsure certain risks
:warning: onshore insurance company incorparates a subsidiary in an OFC to reinsure catastrophic
FUNCTION OF OFFSHORE FINANCIAL CENTRES
:star: Jurisdictions provider
:star: Entities to manage financial systems
with external assets and liabilities
:star: International Centres which provide low /
zero tax, moderate financial regulation, bank secrecy & anonymity
:star:Maintain extensive legislation & to take measure to reduce criminally related activities
:star: Must have / maintain necessary structure for providing the varied services required by global clientele
Attraction Of Investing With OFC
:check: No capital tax
:check: No corporation tax
:check: No capital gains tax
:check:No tax on transfers
:check:No exchange controls