– Financial systems with external assets and liabilities out of proportion to domestic financial intermediation designed to finance domestic economies;

– More popularly, centers which provide some or all of the following services: low or zero taxation; moderate or light financial regulation; banking secrecy and anonymity42.

The Working Group on Offshore Centres under the Financial Stability Forum presumes that «Offshore financial centers (OFCs) are not easily defined, but they can be characterized as jurisdictions that attract a high level of non-resident activity. Traditionally, the term implies some or all of the following (but not all OFCs operate this way):

– Low or no taxes on business or investment income;

– No withholding taxes;

– Light and flexible incorporation and licensing regimes;

– Light and flexible supervisory regimes;

– Flexible use of trusts and other special corporate vehicles;

– No need for financial institutions and/or corporate structures to have a physical presence;

– An inappropriately high level of client confidentiality based on impenetrable secrecy laws;

– Unavailability of similar incentives to residents»43.

Since the main feature of an offshore is its high secrecy or, better saying, lack of transparency, it is impossible to estimate precisely the scope of offshorization of the world economy. International organizations, governments, scientific community and non-governmental organizations can make evaluations only on the basis of indirect indicators.

One of the major roles of secret jurisdictions is to facilitate illicit financial flows. According to the UNCTAD, «large proportion of illicit financial flows… goes through offshore financial centres, based in „secrecy jurisdictions“. Approximately 8—15% of the net financial wealth of households is held in tax havens, mostly unrecorded. The resulting loss of public revenue amounts to $190—$290 billion per year, of which $66—$84 billion is lost from developing countries, equivalent to two thirds of annual official development assistance». The UNCTAD states that «the main vehicle for corporate tax avoidance or evasion and capital flight from developing countries is the misuse of „transfer pricing“ (i.e. when international firms price the goods and services provided to different parts of their business to create profit—loss profiles that minimize tax payments). By this means, developing countries may be losing over $160 billion annually, well in excess of the combined aid budgets of developed countries»44.

The UNCTAD draws a deplorable conclusion. «The international tax architecture has failed, so far, to properly adapt to this reality, thereby allowing a massive hemorrhaging of public revenues. The opacity surrounding tax havens may partly explain the difficulties faced by policymakers in collecting public revenues, but the main obstacle is political: the major providers of financial secrecy are to be found in some of the world’s biggest and wealthiest countries, or in specific areas within these countries. Indeed, offshore financial centres and the secrecy jurisdictions that host them are fully integrated into the global financial system, channelling large shares of trade and capital movements, including FDI»45.

The Tax Justice Network (TJN) in its report «The Financial Secrecy Index» states that an estimated $21 to $32 trillion of private financial wealth is located, untaxed or lightly taxed, in secrecy jurisdictions around the world46. The Christian Aid’s research has found that FTSE100 companies have created 29,891 subsidiaries. The research also highlights heavy use of tax havens by FTSE100 companies. More than 90 per cent of their subsidiaries are based in places defined as «secrecy jurisdictions’