The recent global crisis threw into sharp relief the existence of particular geographical spaces: tax havens. Habitually discreet, they have been singled out as one of the most vital locations of international finance, whose lack of transparency has allowed the present crisis to develop through the multiplication of high yielding but speculative financial products. The world's main political leaders have denounced the role of the tax havens and have publicised a more or less exhaustive list in the hope of promoting practices that are less opaque, as well as the signing of accords with the states in question. Does this mean an end to tax havens?

That Caribbean states are amongst those largely implicated in such financial practices demonstrates the full involvement of the Caribbean basin in financial globalisation. Following an introduction into the nature and role played by tax havens in world finance, several Caribbean case studies – Bahamas, Cayman Islands, and the British Virgin Islands – are developed, as well as that of Panama, before attempting to question their future prospects.

1. Major nodes within a global financial network

1.1. Tax havens or the art of exploiting one's sovereignty

A simple definition would include reference to a country in which foreign-born residents, rich individuals and international companies, invest their capital assets in order to avoid paying tax in their country of origin.¹ In effect, tax havens are not just the result of individual private strategies but also of those of major states which use them in order to satisfy multiple clients. For the latter, tax havens offer a judicially-speaking, fictitious address, a decoupling both in time and space of actual transactions, as between the real location and a juridically defined location, pertaining to those transactions.

What are the recognised criteria for a tax haven defined by the professionals using them? Above all, it involves the imposition of minimum or zero taxation for non-residents who benefit from an inviolable secret bank account, the totally free movement of international capital, the availability of very rapid, simplified, and little controlled registration procedures. All successful tax havens must be underwritten by a major financial centre and possess a high level of on-line access. The territory in question must be such as to merit the confidence of its clients in terms of its political and economic stability, as well as providing other incentives for its non-residents. A series of bi-lateral financial accords with major economic powers ensures complete protection from any kind of prejudicial retort.

Given its sensitivity, the actual number of tax havens is difficult to establish: the Chambost guide of tax havens (2005) gives a total of around 100, including large states (UK, Switzerland), as well as islands (Caribbean, Pacific), European micro-territories (Andorra, Monaco, Lichtenstein), and cities (Kaliningrad, Tel Aviv, Trieste, Tangiers). Since the 2007-2008 economic crisis, now protracted by the current recession affecting all western countries, there have been some revisions of the list (see 3.), and their numbers reduced following measures of financial reorganisation.

1.2. Enterprises created for multiple clients

The major role of these offshore territories consists of creating ad hoc companies to meet to the needs of their users. Above all, they are subsidiaries of large companies designed to respond to multiple objectives: changing the place of residence of the firm or of its owner, changing the place of origin of the income generated, or creating some system of fiscal dissimulation. For a few hundred dollars, IBCs (International Business Corporations) can also be created, which allow the raising of funds on the international marked through the issue of share certificates or bonds. It also allows the exercise of profitable ‘trading' activities on the markets at forward rates, but without any contact with the everyday inhabitants of the tax haven. An endowed foundation that has neither owner, nor shareholder allows the management of assets, and is often private. By contrast, a trust stems from a contractual accord between private individuals, allowing the creation of a barrier between the legal stockholder and the actual beneficiary.²

The clients of these contrived practices are multiple across the world. For a start, there are those rich clients form the world of ‘private banking.' Dollar billionaires and multi-millionaires, they own numerous residences between which they move in search of minimizing taxes paid on their fortunes and their profiteering.

Multi-national firms, whose most influential clients seek through the intermediary of tax havens to reduce their taxes, but also occasionally to conceal their debts in order to present a better balance sheet for the stock exchange quotation. However, the key issue is to maximise any gain to be derived from the differential in taxation as between the source of the profits and the company headquarters address: the latter would seek to exploit the system of price transfer with its subsidiaries.³

All tax havens attract professionals from the finance industry. The specialist banks have been involved for decades using subsidiaries connected on-line to facilitate the international transfer of funds. In the tax haven, the subsidiary serves as a ‘shell' company, in particular as regards illegal transactions (brokerage and back-commissions), as well as for money laundering from organised crime and various trafficking (arms, narcotics, prostitution, gambling). To these bankers should be added insurance companies, more particularly those linked to multi-national firms. All are involved in manipulating speculative investment funds (‘hedge funds') which constitute the nerve centre of speculation on the stock exchange, as much in physical goods (raw materials) as financial transactions (high risk, sophisticated products like sub-primes). In the wake of this financial nebula, professionals in low and accountancy have become major users of offshore centres. Amongst the latter are to be found the top four leaders (the Big Four) of the international council, who exert considerable influence in the spheres of world finance!⁴These specialists are there to validate and market new, highly complex financial packages, the product of arid, financial arithmetic, and which often have no link with economic reality. But their central objective is to ensure huge profits so as to recompense the his risks involved.

Finally, the major states themselves utilise tax havens for secret transactions that cannot appear in published accounts.

1.3. An “Anglo-Saxon” heritage

The end of the 19^th century would see the first signs of economic internationalisation promoting a strong wave of transnational capital flows at a time of more or less aggressive nationalism of the nation-states.⁵ Reconciling sovereignty and mobility of capital, that was the dilemma, particularly for the industrial powers like the United States and Great Britain, conscious of the need to support the internationalisation of their major industries (oil, chemicals, steel-making...). Bi-lateral commercial treaties did not appear to offer a satisfactory solution, with private companies resolving to sort out the problem themselves. It would be the commercial lawyers of New York, who in the 1880s suggested to the Governor of the state of New Jersey to expand its revenue base by proposing a tax-ceiling for all companies establishing themselves in the state. Delaware would follow suit with its tax law of 1986.⁶

To this first advantage accruing to the “offshore” – the attraction of companies for fiscal reasons – would be added the decision by the London judiciary to create, for the same reason, the fictitious address⁷ defined as the place of residence of those who controlled and owned the company. From that time on, British companies re-located their headquarters abroad, thereby escaping paying British taxes. The final building bloc in the setting up of a tax haven was the Swiss law of 1934 on bank secrecy, rendered inviolable under threat of legal action.

Up until the 1960s, tax havens, still few in number, above all provided a fiscal refuge for wealthy individuals and a few large companies. But in 1957, the “Eurodollar” market was created in London, and the Bank of England thereby allowed financial transactions between two non-residents using currency other than sterling, and exempted of all controls. It proved a decisive step towards financial globalisation. The tax havens would become central players of the Eurodollar market in the avoidance of national exchange controls. The Eurodollar become a written accounting sleight of hand, which allows a bank located outside the United States to trade in dollars without the transaction in question being considered to have taken place at the bank's actual address, but ‘offshore' in an non-place, not subject to any financial control.

In aspiring at all cost to transform London into the world's major financial centre, the Bank of England, free of public jurisdiction, but sensitive to the needs of the great banking institutions of the City, would seek to attract major North American banks. However, the latter realised that by re-locating instead to the British overseas territories (Bahamas, Cayman Islands), sharing the same time zone as Wall Street, they would enjoy the same advantages as being in London. Thus begins the rapid ascent of the tropical island tax havens. This non-regulated market would further reduce the transparency of international financial dealings.

During the 1970s, when the capitalist fordist model would run out of steam, a disconnect would arise between productivity and wage levels, in turn effectively squeezing profits. To reverse this trend, new strategies would emerge. A veritable offshore economy would be developed, based on tax havens for finance, but also on industrial free port zones in the search for a cheaper and more compliant labour force, as well as on the system of ‘flags of convenience' in order to reduce shipping costs. In order to escape the costs of social conflicts and employment charges of mainland states, companies re-located to tax havens that offered them low taxation, banking secrecy and supposed residence qualification.

1.4. Micro-states that vitally underpin financial and economic globalisation

Even though the actual number of tax havens is not easily determined in any detail⁸ (see 1.1.), specialists estimate that 2 to 5% of world GDP passes through or is localised in these territories. Half of global commerce by value is transited via the latter, with the same proportion applicable to flows of international finance capital. As such, tax havens act as intermediaries for half of global finance, whether in terms of loans or deposits.⁹

But these havens also play a role in the international division of labour. By receiving a third of the overseas investment flows of multi-national companies, the offshore subsidiaries of the latter provide the essential wheels of the production and distribution of goods and services across the globe. In addition, the increasing monetarisation of multiple everyday acts both within the public and private sectors, coupled with the extraordinary growth in paying on-line services, renders tax havens very useful to those wishing to maximise such profits. More and more on-line payments (telephone, various data processing, banking operations)¹⁰ are located offshore.

In such ways does the fiction of a supposed dividing line between ‘normal' financial transactions, regulated by major institutions and central banks, and the opaque ‘non-regulated' financial world, with its unknown operators, speculatively manipulating huge amounts of capital, become blurred? Whenever this casino economy hits a crisis, it contaminates the other, as happened in the summer of 2008. That financial crisis finds itself being prolonged at the present day by a very serious economic crisis, above all affecting the West, so much so that one can barely discern the close ties that exist between these two worlds, the second being indispensable to the first, without the latter being able to manage its relationship.

2. The major role of the Caribbean basin in the world of offshore finance

2.1. The Caribbean tax havens: a double opportunity, geographically and economically

In the long list of the world's tax havens, the Caribbean basin assumes first place in terms of member and ranking of certain specialist financial services (see below). On the IMF list dated 2000, 19 ACS member states appear out of a total of 60, i.e. one third. There are mainland states (Belize, Costa Rica, and Panama), the 16 others are islands including those of the Antillean archipelago. They play a vital role in the world of offshore finance. As such in 2004, the three archipelagos of the Bahamas, the Cayman Islands, and the British Virgin Islands, as well as Panama, were home to the headquarters of 1 200 000 offshore companies out of a world total estimated at the time to number around 2 100 000, i.e. 55% of the total (see table below). The Cayman Islands ant the Bahamas alone accounted for 500 and 4 300 respectively of the offshore banking subsidiaries! Likewise, the Cayman Islands, and more recently the British Virgin Islands are the favoured refuge of insurance companies. They are in receipt of enormous flows of investment destined directly overseas.¹¹ The Cayman Islands hold 80% of the 1 200 billion of speculative ‘hedge funds,' so closely implicated in the recent global financial crisis.

Their geographical proximity to the USA is a major advantage. For the most part, situated in the same time zone as Wall Street, the central pivot of world finance, and the heart of the world's leading economic power, they benefit from close access, both by air and internet. These offshore havens are former European colonies, liberated belatedly or still attached as European overseas dependencies. With small populations, these territories have limited natural resources, restricted markets and their socio-economic survival has depended on finding new economic niches allowing their integration within the world economy. To this end, they have exploited links retained with the former colonial power, whether British or Dutch,¹² having adopted the same political structures as their old metropolitan centres, in general offering established systems of democratic and stable governance. In addition, their currencies enjoy parity with the US dollar. Their insular tropical environments lend themselves to tourism, particularly at the up-market end, so as to attract wealthy non-residents, above all discreet as much in pursuit of their business interest, as in enjoying visits to their sumptuous residences. The distortion in wealth terms between the world of the outsider and that of the small local population raises little in the way tensions that might otherwise threaten “the goose that lays the golden eggs.”

 

Territories given over to service economies

	Area (km²)	Population (1 000 inhab.)	Financial services (% GDP)	Tourist receipts (% GDP)	Multi-nationals (n° of company headquarters))	Companies (total n°)
Bahamas	13 500	331	15	30	156	42 616
Cayman Islands	260	52	14	17	1 130	72 000
British Virgin Islands	150	23	45	45	244	619 916
Panamá	76 000	3 350	7	9	125	369 652

2.2. Three Anglophone island groups exemplify on tropical insular offshore system

These three archipelagos illustrate the wide range of services offered by a tax haven. Whilst the Bahamas are independent, the other two remain British colonies. All three are important tourist destinations, but the latter relates only to the stopovers of cruise ships. Other visitors stay in ‘de luxe' residences. The large number of uninhabited islands, and the ultra-free market regime regarding local land rights and property offers rich clients the possibility of acquiring opulent places of residence, discretely located, serviced by private plane or helicopter. Yachting is very popular in a region allowing easy passage by sea from one island to the next, where casinos and other leisure pursuits are available.

The Bahamas archipelago stretches across some 700 islands (of which 40% are uninhabited) covering a distance of 1 200 km from Florida to the easternmost point of Cuba.¹³ Half the population is concentrated in New Providence with its capital Nassau. Tourism represents a mainstream activity, with both holiday stays and cruising stopovers, representing 2 billion dollars in annual receipts. This archipelago offers the most complete range of ‘offshore' services in the Caribbean islands. The financial services account for 15% of its GDP, but to which must be added the receipts of the vast commercial zone of Freeport (Grand Bahama Island).¹⁴ Again, adjoining the latter is the hugely important maritime logistics platform, home to one of the world's major ‘flags of convenience' operations.¹⁵

The British Virgin Islands comprise a total of 30 islands(of which a third are uninhabited) stretching across 150 km². A British colony still, it lives above all from financial services and tourism (see table). The latter combines ocean cruising (large yachts), privately run nautical activities, and sumptuous residences. The archipelago's promotion as a tax haven is the most recent of the three under consideration, which stems in part from the re-location of some clients from the Bahamas following their independence. As such, the registration of companies now reaches some 30 per inhabitant! (see table).

For a long time a dependency of Jamaica, the Cayman archipelago also remained a British colony after the independence of the aforementioned state. Midway between Jamaica and Cuba, these three islands with a combined population of 52 000 inhabitants, also thrive on luxury tourism and financial services. This archipelago ranks as the fifth most important financial centre in the world! It is the haven of speculative funds and ‘shell' companies, and the preferred tax haven of the United States. More than 1 000 billion dollars of opaque funds are generated here. In effect, taxation does not exist in the Cayman, which lives off the sale of bank licences and import rights in an archipelago that purchases abroad 90% of all that it consumes. However, in 2004, hurricane Ivan caused devastation across the islands. In turn, the financial crisis of 2007-2008 led to a significant reduction in revenue for the financial institutions, which were forced to lay off local personnel. North American tourists became much fewer in number, with a further decrease in local authority resources, to whom London refused authorisation to borrow from locally registered banks, thereby demonstrating the sealed off nature of this offshore world in relation to any validating outside authority. London demanded the imposition of a land tax, which will impact on the wealthy expatriates who make up half the population. Cyclonic climatic hazards affect virtually the whole of the Caribbean basin, and add a further element of insecurity to the offshore world.¹⁶

2.3. The special case of Panama: a corridor of globally important services articulated along a transoceanic canal

The history of Panama is unique within Central America. Its origin stem from a secession from Colombia in 1903, under the influential guardianship of the United States which constructed and opened the canal in 1914, along the “Canal Zone” which remained in their possession until 31 December 1999. The transmutation of this logistically vital node of American geostrategic importance, into a multi-service logistical corridor of global reach continues. It is based on a canal in the process of enlargement¹⁷ which accounts for the through passage of 5% of global maritime traffic. This canal activity represents 10% of national GDP, and generates at its two ends the development of massif port complexes. On the Caribbean side, the latter supplies the second largest commercial free port zone in the world (after Hong Kong) and 8% of GDP;

Since 1925, Panama offers all ship-owners a registered ‘flag of convenience'¹⁸ which currently affords it the top-most ranking in the world with 6 842 ships totalling 271 million tons in weight in port (1 January 2009). The Panamanian fleet thus represents nearly one quarter of the world's shipping total, with 16% of oil tankers, over 30% of bulk general cargo ships, and more than 20% of container ships. This dynamism in marine activities is based on a network of maritime consulates, which covers all the world's major ports, in which one or two days suffice to register a ship. The Panamanian system is very lax in respect of social regulations, does not impose any taxes on profits and simplifies in the extreme the administrative formalities involved. In addition, the legal costs, and those of inspection, maintenance, and registration bring in around 200 million dollars each year to Panama.

These activities are comforted by the presence of a first order offshore financial centre. The United States have maintained a strong influence on Panama, whose currency (the balboa) enjoys parity with the dollar. Numerous are the retired from North America who settle in the zone near to the canal. Panama acts as a crossroads between the two Americas, but also between Asia and America. China has become the second most important user of the Canal after the United States, developing its interests across the whole of Latin America, where Japan has already established a solid commercial foothold.

Midway between the world's major consumer of drugs to the North and the producer Andean regions (to the South), Panama can also usefully act in the laundering of narcodollars, keen to rid itself of a sullied reputation already tainted by the involvement of its ships in disasters at sea.

This service corridor represents the spine of the Panamanian economy. In 2007, it generated a surplus of nearly 3 billion dollars to the service sector balance sheet (16% of GDP), allowing Panama to make good some two-thirds of its commercial deficit.

3. Tax havens: a threatened or indispensable tool?

3.1. Recent legislation initiatives relating to tax havens: reform or posturing?

It was at the beginning of the 21^st century that international authorities and certain industrial nations decided to confront the opaqueness of the offshore finance system. The last financial crisis, the so-called ‘sub-primes,' marked amongst other events by the collapse of Lehman Brothers Bank, served only to reinforce this decision. In 1999, the OECD's Committee on Fiscal Affairs drew up a list of 47 tax havens; but in 2000 its publication included only 35 names! The Financial Action Task Force (FATF) created in 1989 to combat drug trafficking, in 1999 still listed 29 “doubtful” states, of which 15 territories were deemed non-cooperative in a report published in June 2000.¹⁹ But in October 2006, not one of these territories is recognised as still non-cooperative with the FATF!

On 2^nd April 2009, the OECD published a triple list encompassing some 60 world tax havens: a “white list” covered those that had signed a dozen bi-lateral accords. Those that did not meet these conditions made up the “grey list:” 38 countries of which almost all where Caribbean tax havens, and with Costa Rica appearing on the “black list” together with three other states. They would be removed a few months later.²⁰

Did these initiatives, rapidly put in place, result from pressures exerted by the international financial authorities (IMF, OECD), or rather from a position designed to re-assure public opinion concerned by the scale of the financial crisis, in turn prolonged be the severe economic crisis enveloping western states? What is being demanded of tax havens is above all else the completely open exchange of fiscal information, but so far the lifting of banking secrecy is limited only to penal cases. Furthermore, should the national authorities themselves make these demands for information? At present, industrialised states are carrying huge public deficits, which should stimulate themselves in the search for new sources of revenue. In fact, it is easier simply to create new taxes than effectively combat fraud and tax evasion. The future of these secrecy jurisdictions appears hardly threatened by these regulatory demands that seem only concerned with the elimination of ill-reputed havens.

3.2. A geographical shift at the heart of the world economy mitigating against ‘Anglo-Saxon' financial interests

The emergent economies have remained little affected by the double financial and economic crises. The world economic seems now to be shifting towards a United States – China duopoly, with on the finance side, Chinese currency surpluses used to fund US deficits. Is there not a risk of seeing the flow of capital towards the Caribbean tax havens drying up to the advantage of their Asiatic competitors?

At the same time, does not the rise in financial power of the Arab-Persian Gulf states risk seeing the diversion of flows habitually destined for the City of London, now re-directed to promoting their own regional centres (Dubai)?Moreover, there has been a recent tendency for Islamic banking to preach respect for Sharia law in financial transactions,²¹ which could well accentuate a degree of growing autonomy of Islamic banking within the global markets.

3.3. The trump cards held by Caribbean tax havens

The first of these ‘cards' stems from the continuity of US power. In the decades to come this country will remain a major global economic force, shared with China and a few other emerging states (India, Brazil). The country's capacity for innovation, its intellectual and material resources, its strategic potential arguably guarantee it avoiding the sort of decline likely to assail Europe's financial position.

The second ‘card' relates to the existing ‘know-how' of Caribbean havens within the offshore world system. It firstly relates to easy access reinforced by the attractions of a luxury residence so appreciated by those clients that frequent such havens, and their friends and relatives. Their present size and status ensure strong stability in respect of specialist financial services that demand discretion and secrecy.

However, these archipelagos find themselves in the heart of one of the world's most dangerous regions, witness to repeated murderous events, particularly along the bordering mainland (from Mexico to the Guianas). This situation arises from the region's role as a powerbase for organised crime, dominated by the drug traffickers cartels that combine the trafficking in drugs, humans (prostitutions, migrations), arms (supplying private militias and guerrillas), wild animals (plundered from the tropical forests for export to the West). This multiple trafficking generates considerable revenues, often paid in cash, amounts requiring to be laundered. The tax haven is the ideal locus for such transactions. Already referred to in this context is the example of Panama (see 2.3. above).

3.4. The curbs on policies opposing tax havens

The first stems from the attitudes of the states themselves. Some are tax havens, or considered as such, for example, Ireland, Switzerland, Luxemburg, and micro-states like Monaco, Andorra, Liechtenstein.²² In addition, the world economy has become increasingly globalised, a trend that impacts heavily on national policies. In matters of economy, national policies barely succeed in providing corrective action at the margins of a global complex, juxtaposing finance, insurance, audit, share quotations, and several major powers.²³ At a national level, the economic-financial complex weighs heavily on individual states which, in the majority of cases, have adopted the law of the market, even when politically their ideology is out of sine with this free market credo.

This financial nebula, a web which articulates and feeds the global economy via its financial flows, derives too many advantages from the offshore finance practices to pass them by. Thanks to these tiny sovereign spaces, the world financial market minimises its operational costs and maximises its profits. In terms of regulation, it is therefore incumbent to remove the excesses rather than abolish the practice. This is without doubt the conclusion that has been reached by states in their dealings with tax havens (see 3.1.). Political leaders have seemingly not wanted, or been able, to use the opportunity presented by the most serious post-war economic crisis to attempt to regulate this ‘casino' economy. The continued existence of the tax havens is hardly threatened. Public authorities, which a short while ago swore to bring about their demise, appear now to be content with a few legislative adjustments, affecting the opaqueness of practices to the detriment of tax exiles.

Thanks to its tax havens, the Caribbean basin has acquired a global notoriety in one major domain: international finance. By a strange parallel, this role bestowed by its external mentors recalls at the same time the beginnings of the region's colonial history, when under Spanish rule, the precious metals of the New World were loaded onto ships in the Caribbean ports for Spain, to underpin the Iberian imperial power during the whole of the 17^th century, before benefitting their other powerful European rivals. Undercover in the archipelagos, like the Bahamas or the Cayman Islands, the privateers and later the pirates would lie in wait to take their prey. Henceforth, it would be other financial and internet adventurers who, armed with the computers of ‘shell' companies would await a profitable financial coup!

But these tax havens do not appear at the end of one of these innumerable economic cycles that the Caribbean has witnessed over the last five centuries. As the flow of precious metals petered out after the 18^th century, as the major Antillean oil refineries lost out after the 1980s, as the industrial free ports of the Greater Antilles and the middle American isthmus suffered over the last two decades from Asian competition, what now does the future hold for the Caribbean tax havens?

Caribbean leaders remain very supportive of this financial niche which contributes a sizeable part of the archipelagos' revenues even though the social distribution of the latter leaves much to be desired.²⁴

Beyond an already evident shift in world economic power towards Asia, the Caribbean tax havens nevertheless remain two steps away from the United States, their ambitious and powerful mentor, and still the world economic leader, a role albeit shared more and more with others. Without any fundamental change in financial practices, the financing underpinning the sovereignty of micro-states remains primordial. It serves as a haven for capital funds seeing to escape taxation, if not legally bound. It permits the sale of property licences, covering the banking domain as much as that of companies or ship-owners. It is also integral to the panoply of survival strategies for small tropical island territories, especially when the latter offer their clients the possibility of a “paradisiae.'²⁵

 

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¹ For the OECD, a tax haven offers a jurisdiction which imposes little or no tax on revenue from capital, with opaque practices allowing the creation of fictitious companies, and which refuses to provide financial information to foreign authorities.

² Worldwide there are over 1 000 trusts in 350 000 offshore accounts, generating 3 to 8 000 billion dollars (see Chavagneux and Palan).

³ The transfer price represents the more or less fictitious price of goods and services, invoiced within the same company between itself and its subsidiaries. As such, the headquarters are situated in one place, invoicing as far as possible all transfers to its subsidiary located in a tax haven, and minimising transactions between its subsidiary and the registered offices in a higher tax location.

⁴ KPMG, Ernst and Young, Pricewaterhouse Cooper, Deloitte-Touche-Tohmatsu.

⁵ In 1913, the stock of Foreign Direct Investment (FDI) reached 9% of world GNP. It would take until 1990 to achieve the same rate.

⁶ During the 1920s, 40% of Delaware's fiscal receipts came from company registrations. Today, nearly half of American companies quoted on the Stock Exchange still have administrative offices in Delaware.

⁷ In 1906, a London Court imposed the London based customs duty on the international diamond firm De Beers, registered in South Africa, on the pretext that those staff who both controlled and managed the company lived in London.

⁸ The IMF list in 2000 identifies 61 countries as offshore centres. On 2^nd April 2009, the OECD established three lists, based on the increasing opaqueness of their practices: “white list,” “grey list” (36 territories), and “black list” (3 territories).

⁹ In 2004, more than 2 million companies were listed as having their head offices offshore. The more exotic offshore locations accounted for 30% of the total capital flows, London remaining the world's foremost financial centre.

¹⁰ Four years later the purchase in 1991 of the Guyana Post Office by an American company, the average duration of a telephone call increased from 24 minutes to 2 hours 20 minutes. Around the same time, each inhabitant of the Dutch West Indies was supposed to have used the telephone form more than 3 hours (see Chavagneux and Palan, p. 26).

¹¹ The same book (see above) reports that in 2005, the British Virgin Islands were ranked second after Hong Kong as the locus of Chinese investment with 9 billion dollars, and the Cayman Islands ranked 8^th with 2 billion dollars.

¹² Since 1946, the former French colonies (Guadeloupe, Guiana, and Martinique) have the status of Overseas French Departments, part of the Outermost Regions (OMR) of the European Union. The politico-economic history of France precludes allowing the creation of true tax havens. Its long tradition of centralist control and its aversion to free market liberalism make it one of the most virulent present-day critics of offshore havens, whilst at the same time exploiting the latter's advantages via its own banks and companies. Nevertheless, since their new status, which grants them the possibility of establishing their own fiscal code, the French part of St. Martin and the island of St. Barthélemy have without doubt financial ambitions in the offshore market.

¹³ Independent since 1973, the Commonwealth Archipelago of the Bahamas has a parliamentary system with an assembly of 40 members elected for 5 years, and a senate of 16 members chosen by the First Minister. The Queen of England is represented by a Governor-General.

¹⁴ One of the most important in the region after that of Colón and that of Miami.

¹⁵ Thanks to its ‘flag of convenience,' the Bahamas shipping fleet is ranked 7^th in the world, with a deadweight of 58 million tons on 1^st January 2009, and 1 240 ships in total, including numerous cruise liners.

¹⁶ The most recent hurricanes caused major damage, as much across the Bahamas as across the Turks and Caicos Islands (situated just to the South of the latter).

¹⁷ The construction of a second series of lock gates will allow the passage of much larger ships.

¹⁸ An “open register” in matters maritime allows a ship-owner or company to register his ship in a country without having any link with the country that accords its flag. A chip can change its flag (of convenience) several times annually.

¹⁹ Of which 6 to the ACS – Bahamas, Cayman Islands, Dominica, Panama, St. Kitts and Nevis, St. Vincent.

²⁰ Since March 2010, 3 Antillean tax havens have been removed from the “grey list:” St. Kitts and Nevis, St. Vincent, and Anguilla.

²¹ In matters relating to financial practices, Islamic law forbids interest, imposes the sharing of profits, insists on social obligations by holders of capital, and prohibits the financing of certain activities (gaming, illicit products...).

²² London is still the world's foremost financial centre.

²³ Current speculation against the Euro, and the Greek and Spanish debts, demonstrate the enduring practices of world finance.

²⁴ In 2002, 21 states in the Caribbean basin agreed to put in place a surveillance system for the monitoring of offshore activities – the Caribbean Financial Action Task Force (CFATF).

²⁴ The construction “paradisiaque,” used in the original French text, plays on the French rendering of “tax haven” as “paradis fiscal” (‘paraiso fiscal' in Spanish). Some say that the use of the world ‘paradise' comes from a mi-translation of ‘haven' as ‘heaven,' which of course would provide a welcome escape from a hellish high tax ‘onshore' location.

 

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Bibliography

 

Brunet R., (1986), Atlas mondial des zones franches et des paradis fiscaux, Paris, Montpellier, Reclus coll. Atlas Reclus, 80 p.

 

Chambost E., (2005), Guide Chambost des paradis fiscaux, Fabre, Lausanne, 8^e édition.

 

Chavagneux C., Palan R., (2009), Les paradis fiscaux, Nouvelle édition, Avril, La Découverte (ouvrage fondamental).

 

Duhamel G., (2001), Les paradis fiscaux, Paris, Grancher, 406 p.

 

Desse M., Hartog T., (2003-4), Zones franches, offshore et paradis fiscaux : l'antimonde légal, Mappemonde n° 72, p. 21-24.

Newspaper: Le Devoir (08.08.2005)

 

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