Chapter 1: Offshore Finance Centres Flashcards
Offshore centre/International finance centre
A jurisdiction is a centre where the bulk of financial sector activities is offshore and where the transactions are initiated elsewhere. i.e. a jurisdiction which provides most of its financial services business to non-residents.
What is a jurisdiction?
A territory over which authority is exercised by laws which are under the control of a system of courts different to that of its neighbouring areas.
What is a low tax jurisdiction?
A jurisdiction where direct taxes are relatively low compared to most onshore centres.
What is a tax haven?
A nation, state or jurisdiction that has no or nominal taxes, lack of transparency, lack of effective exchange of information and legislation that is designed to attract foreign capital with special tax treatments available to non-residents but not local residents.
What are direct taxes?
Taxes that are collected from individuals straight to the government (e.g. tax on income).
What are indirect taxes?
Taxes that are suffered by individuals but are collected by the government via a third party (e.g. tax on expenditure).
What does money laundering occur?
Money laundering occurs whenever there is an arrangement involving the proceeds of crime.
FATCA
The US standard for the reciprocal exchange of tax information relating to non-resident customers.
CRS
The international standard for the reciprocal exchange of tax information relating to non-resident customers.
Onshore offshore centre
An onshore centre which can be used by offshore residents for offshore purposes due to the treatment that centre has for non-residents.
Exchange control regulations
Regualtions or other controls that are imposed by governments of some countries that fear or are experiencing scarcity of foreign currency or precious metals. Such controls may limit or ban the amount of foreign or local currency that can be traded or purchased or restrict residents from removing the currency from the jurisdiction.
Forced heirship
In some countries, the laws require the assets held in a person’s estate to pass to stated heirs (usually the person’s spouse and children). This is known as forced heirship and such heirs are known as ‘forced heirs’ (or sometimes ‘fixed heirs’).
Corruption
Transparency International defines corruption as ‘the misuse of entrusted power for private gain’. Public sector corruption involves, for example, the diversion of state funds for the benefit of politician’s own families.
Service provider
Organisations or individuals who provide financial services business offshore may simply be referred to as service providers.
Registered office
The address of a company which has been notified to the authorities (as requied by law) as the address to whic legal notices can be sent.
