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...