Offshore Jurisdictions in World Tax Competition

Why, you think, are the high tax countries struggling with offshore jurisdictions?

Most people when they hear the word “offshore” they associate it with something illegal: money laundering, financing of terrorism, tax-avoidance.

The mentioned list of activities is just a negative side of existence of so-called offshore jurisdictions, which is difficult to avoid and makes all countries, both high and low taxed, to co-operate to eliminate it. But there is another side that gave an impulse for a number of countries to develop and introduce legislation on non-resident companies (which are mainly known all over the world as offshore companies).

Any Country Has to Survive Economically

For the most countries foreign capital is the most efficient way to keep its economy alive and kicking, and this is even more vital for those small and less-developed ones.

Each country is trying its best to attract a foreign investor. The most popular instrument is introduction of a special preferential taxation regime for foreign investments. The lower the taxes are, the less bureaucracy accompanies business the more investors will come to your country, the more money they invest in your native economy with all the positive consequences for the country’s welfare.

There is Nothing Illegal About Choosing a Low-Tax Jurisdiction for Your Business

There is obviously nothing illegal or damnable about the fact that more and more businesses are choosing low-tax and less-bureaucracy jurisdictions to keep their funds in or conduct their activity from. And this is absolutely right they have a choice of taxation regimes.

If low-tax regimes did not compete with highly developed countries taxation in those latter would become even higher and not excluding unfair and insane. Offshore jurisdictions provide a reasonable balance to the countries with high taxes.