Offshore Financial Centers and Regulatory Competition

by Morriss, Andrew P.; Antoine, Rose-Marie Belle; Boise, Craig M.; Dionne, Anna Manasco; Gordon, Richard K.; Macey, Jonathan R.

• ISBN13: 9780844743240
• ISBN10: 0844743240
• Format: Hardcover
• Copyright: 2010-06-16
• Publisher: AEI PRESS

Summary

Offshore financial centers (OFCs) have a troubled reputation for enabling tax evasion, money laundering, autocratic looting, and even the financing of terrorism-but they play an essential role in the world economy. Fears of criminal activity have prompted many onshore governments to restrict offshore competition, but over-regulating OFC activity presents a serious risk of destabilizing the global financial system. In Offshore Financial Centers and Regulatory Competition, a group of leading international law and finance experts argues that offshore jurisdictions have become key players in corporate finance and captive insurance markets. OFCs offer legal protections for financial privacy and provide regulatory competition to onshore jurisdictions, forcing national governments to evaluate and reform their own tax and regulatory policies. Offshore centers also help to streamline foreign direct investment and create growth opportunities for countries with weak financial systems by providing access to global capital and sophisticated courts. As the ongoing financial crisis produces new regulatory regimes aimed at eradicating money laundering and other white-collar crimes, Andrew P. Morriss and his coauthors contend that legitimate offshore competition must be allowed to flourish. OFCs are no longer the shady tax havens portrayed in popular media, and onshore governments must recognize and protect their important contributions to the global economy.

Table of Contents

Introduction	p. 1
Offshore Finance and Onshore Markets: Racing to the Bottom, or Moving toward Efficient?	p. 8
The Critics and the Supporters of Offshore Competition	p. 10
Modern Offshore Finance	p. 13
A Review of the Controversy	p. 17
Offshore Finance Benefits Onshore Regulatory Regimes and Investors	p. 18
Public Choice: Sources of Opposition to Regulatory Competition	p. 26
Conclusion	p. 27
The Legitimacy of the Offshore Financial Sector: A Legal Perspective	p. 30
The Context of Offshore Legal Rules	p. 31
Tax Issues	p. 33
Confidentiality	p. 35
Offshore Trusts	p. 39
Conflict of Laws	p. 45
Copycat Support	p. 47
Conclusion	p. 48
Regulating Tax Competition in Offshore Financial Centers	p. 50
International Income Taxation	p. 51
Defining Tax Competition	p. 53
Arguments for Regulating OFC Tax Competition	p. 57
Arguments against Regulating OFC Tax Competition	p. 61
Regulating International Tax Competition	p. 66
Directions for the Future	p. 69
The International Monetary Fund and the Regulation of Offshore Centers	p. 74
The International Monetary Fund and Harmful Tax Practices	p. 74
The IMF and Prudential Supervision	p. 76
The IMF and Money Laundering and Terrorism Financing	p. 88
Recent Developments	p. 99
Some Conclusions	p. 100
The Role of Offshore Financial Centers in Regulatory Competition	p. 102
For What Do Jurisdictions Compete?	p. 105
Competition among Jurisdictions	p. 112
The Rise of Competition and the Role of Offshore Jurisdictions	p. 123
The Impact of Regulatory Competition	p. 139
Conclusion	p. 144
Notes	p. 147
Index	p. 185
About the Authors	p. 197
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