OFFSHORE BANKING, TAX HAVENS AND DEVELOPING COUNTRIES: AN OVERVIEW

Abstract

This paper took a perspective of the emergence and operations of offshore banking, offshore centers and tax havens. The methodology adopted for the study was a historical review of literature. It covered various areas of operations of offshore banking in different forms and geographical areas. Offshore financial centres developed as important part of offshore banking. The study also reviewed the existence of tax havens which produce symbiotic relationships with offshore centres. Offshore banking from the study has some advantages and disadvantages. The disadvantage has been more felt by developing countries. Tax havens have been of immense benefits especially for multinational corporations. But they have been severely criticized for enlarging the incidence of tax avoidance and tax evasion and creating problem of tax-base erosion and profit shifting by multinational corporations. Conclusively, it has been argued that economists, policymakers and researchers do not entirely agree on what constitute tax havens and the associated offshore finance. It is recommended that more stringent controls and regulations be pursued globally in the regulatory frameworks of offshore banking and tax havens.