In fact, an Offshore Financial Center (OFC) is a low-tax jurisdiction specializing in the provision of business services and company formation to non-resident offshore companies and providing business opportunities. offshore capital investment. The operation of the OFC should not, however, obscure the legitimate role of these centers in the global financial system. A number of jurisdictions are transforming into true financial centers offering enormous benefits by enabling legitimate financial planning and risk management. Before providing loans to countries with underdeveloped corporate laws, the importance of OFCs can be seen in the situation of the Overseas Private Investment Corporation (OPIC), a US government agency. OPIC requires a borrower to form an “offshore” intermediary to facilitate loan financing. Example of real financial centers in Singapore and Hong Kong. This section argues that despite the opacity and secrecy of the banks' business structure, these two jurisdictions can be distinguished from classic tax havens and their examples show that tax competition from below is not necessarily “harmful”. Say no to plagiarism. Get a tailor-made essay on “Why violent video games should not be banned”?Get the original essayTax havens and OFCs are closely related, a tax haven is a country that offers foreign individuals and companies a tax obligation minimal in an economic and political context. stable environment. More generally, through transfer pricing, tax havens allow multinational enterprises (MNEs) to shift their profits from a high-tax jurisdiction to a low-tax jurisdiction. It is argued that most industrialized countries have an affinity tax haven, such as Guernsey with the United Kingdom, Gibraltar with Spain and Monaco with France. Although their resources are limited, these islands are small enough for expansion into industrialized countries. Being a tax haven is a method of survival. Thus, Hong Kong and Singapore are chosen to develop their “offshore” sector. Their jurisdictions follow a historical development path and have evolved from warehouses to financial centers, but for different reasons. Hong Kong is the gateway to China while Singapore occupies a strategic position close to Southeast Asia. The offshore financial center has the offshore banking licenses. A multinational company establishes an offshore bank to carry out its foreign exchange operations or to facilitate the financing of a joint venture with an international company. Additionally, a domestic bank established a wholly owned subsidiary in an OFC to offer offshore fund administration services such as transfer agent, fund administration, fund accounting and global custody services fully integrated. The owner of a regulated onshore bank has created a “parallel” sister bank in an offshore financial center. The appeal of the offshore financial center may include less strict trade restrictions and reporting requirements, light supervision and regulation, no exchange controls, no capital and capital gains tax, no tax on companies, no tax on transfers and no withholding tax on dividends. or interests. For example, under the Labuan Financial Services and Securities Act 2010 (“LFSS”), offshore banking activities in Labuan can be implemented by offshore companies, a Malaysian bank and branches of the foreign offshore company. The offshore financial center can help,.