A RESEARCH PROPOSAL
TOPIC: THE ANALYSIS OF OFFSHORE BANKING AND ITS EFFECT ON TAXATION
INDEX NO#: CIBT/BAMS/09/
DATE: 2ND NOVEMBER 2012
Offshore banks are banks wherein a majority of their depositors are located in a jurisdiction outside their own country. Unlike is the modern perception these banks are not only located in the smaller tax havens, but some of the bigger countries like the United States and Hong Kong also have banks which get a majority of their dealings from depositors in a foreign country. What makes these offshore banks sought after?
First and foremost is the fact that these banks secure the privacy of the depositor. As we know today, most banks, especially in the United States; do not essentially respect depositor privacy, as they disclose all information about the clients to anyone (and not just the government) that makes an attempt to find out. This is where these offshore banks differ. Absolute secrecy is maintained by these banks with regards to their clients. The Swiss bank example can be given in this instance. These banks do not disclose any information about their clients until and unless proof is produced, say by a government agency, of any sort of money laundering, fraud or any other form of financial crime, for which depositor identity or information needs to be disclosed. Secondly, these banks are generally located in tax havens, or places with a favorable tax structure. Hence these banks are a lucrative option for big companies seeking tax benefits. But, this also the cause of worry for a lot of governments, as they feel that this way they are losing out on a lot the tax which they would have otherwise earned. Thirdly, these banks are generally located in countries which are and have been politically and financially stable. This sort of eliminates any problems that may arise if a depositor is located in an unstable environment, where he runs the risk of his assets being taken over by the government and frozen as had happened in the Argentine economic crisis in 2001. Political stability has other advantages as well, because such countries which have minimum governmental intervention and can operate their banks at lower costs and provide higher interest rates. Fourthly, we have already mentioned that a lot of these offshore banks are in small island nations, usually cut off from the main stream world. These banks, therefore, give these small countries an opportunity to merge with the rest of the world, as they can participate directly in their economies by sourcing investments etc, and can help distribute the world finance from the bigger stronger economies to the smaller developing economies. The term "offshore banking" also refers to the provision of financial services by banks and other agents to non-residents, a practice that has gained an increasing amount of notoriety in recent years. This paper provides a review of the scholarly and peer-reviewed literature to develop an overview of offshore. An analysis of how offshore banking has affected taxation in Ghana is followed by a discussion of what can be done to monitor the activities of offshore banking. A summary of the research and salient findings are provided in the conclusion.
THE PROBLEM STATEMENT
Offshore banks are banks located in a tax haven outside the country and are used by domestics to avoid taxation as well as to obtain other legal and financial advantages. However, there are several problems with offshore banking procedures as they exist today, including offshore banking and its analysis on taxation, lack of financial security, associations with the underground economy and organized crime, lost government tax revenues and others.
The research will seek to find solutions to the following research questions which will be raised by the researcher in the course of the research. 1. What are the benefits of offshore...