The looting continues: tax havens and corruption

John Christensen

113 citations0/0 files storedCritical Perspectives on International Business

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Crime, Illicit Activities, and Governance Corruption and Economic Development Corporate Taxation and Avoidance

Abstract

Purpose The purpose of this paper is to consider the activities of tax havens in the global financial markets and explore their role in providing a supply‐side stimulant for corrupt practices. It aims to argue that the corruption debate needs to shift to a second phase in which the role of tax havens as supply‐side stimulants features more prominently. Design/methodology/approach Based on the author's original research into the practices and activities of tax havens, the paper explores the operational features of tax havens, with particular focus on their role in providing opaque and complex offshore structures through which illicit financial flows can be routed to disguise their origins, method of transfer and true beneficial ownership. The paper explores how bankers, lawyers and accountants create complex and opaque offshore structures to facilitate economic crime and impede investigation. Findings Despite severe limitations imposed by the absence of rigorously researched statistical data on capital flows into and out of tax havens, the paper argues that the available data support the view that tax havens have become prominent features of the globalised capital markets, and their activities create a criminogenic environment in which illicit financial flows are easily disguised and hidden amongst legitimate commercial transactions. The paper notes that effective remedies are available to reduce financial market opacity, but political will is lacking to take effective action. Originality/value This paper tackles a new and under‐researched subject. Drawing on the author's experiences of working on a prominent tax haven for a total of 14 years, the paper brings attention to the impact of tax havens on international development.

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References

1992The work of nations: Preparing ourselves for 21st century capitalism 2004The Social Irresponsibility of Corporate Tax Avoidance: Taking CSR to the bottom line 2006Poverty Reduction and Growth: Virtuous and Vicious Circles 2022New Estimates of Capital Flight from Sub-Saharan African Countries: Linkages with External Borrowing and Policy Options 1998The Offshore Interface. Tax Havens in the Global Economy 2005Fair Trade for All 1996The Offshore Interface 1999Offshore and the Structural Enablement of Sovereignty

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2016The Nature of Corruption: An Interdisciplinary Perspective 2020A review of money laundering literature: the state of research in key areas 2019One Bad Turn Deserves Another: How Terrorism Sustains the Addiction to Capital Flight in Africa 2023The morality and tax avoidance: A sentiment and position taking analysis 2018Regulating multinational enterprises (MNEs) transactions to minimise tax avoidance through transfer pricing : case of Zimbabwe

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