View source for Finance:Conduit and sink OFCs

{{short description|Classification of tax havens}}
'''Conduit OFC''' and '''sink OFC''' is an empirical quantitative method of classifying [[Finance:Corporate tax haven|corporate tax haven]]s, offshore financial centres (OFCs) and [[Finance:Tax haven|tax haven]]s.<ref name="guar">{{cite news|url=https://www.theguardian.com/world/2017/jul/25/netherlands-and-uk-are-biggest-channels-for-corporate-tax-avoidance|title=Netherlands and UK are biggest channels for corporate tax avoidance|newspaper={{wipe|The Guardian}}|date=25 July 2017|access-date=27 April 2019|author=Daniel Boffey|quote=Almost 40% of corporate investments channelled away from authorities and into tax havens travel through the UK or the Netherlands, according to a study of the ownership structures of 98m firms.|archive-url=https://web.archive.org/web/20180524223447/https://www.theguardian.com/world/2017/jul/25/netherlands-and-uk-are-biggest-channels-for-corporate-tax-avoidance|archive-date=24 May 2018|url-status=live}}</ref><ref name="bloom">{{cite web|url=https://www.bloomberg.com/news/articles/2017-07-31/is-the-u-k-already-the-kind-of-tax-haven-it-claims-it-won-t-be|title=Is the U.K. Already the Kind of Tax Haven It Claims It Won't Be?|publisher={{wipe|Bloomberg News}}|author=Hugo Millar|date=31 July 2017|access-date=27 April 2019|quote=The U.K. is the second biggest offshore financial centre for the 'conduit' of money to small 'sink' tax havens like the British Virgin Islands or Cayman Islands, researchers at University of Amsterdam have concluded in a report publisher in Nature.|archive-url=https://web.archive.org/web/20180613185644/https://www.bloomberg.com/news/articles/2017-07-31/is-the-u-k-already-the-kind-of-tax-haven-it-claims-it-won-t-be|archive-date=13 June 2018|url-status=live}}</ref><ref name="bloom2">{{cite web|url=https://www.bloomberg.com/view/articles/2017-04-11/tax-havens-can-be-surprisingly-close-to-home|title=Tax Havens Can Be Surprisingly Close to Home|publisher=Bloomberg View|author=Mark Buchanan|date=11 April 2017|access-date=10 June 2018|quote=The U.K., the Netherlands and Switzerland play bigger roles than they might have realized.|archive-url=https://web.archive.org/web/20180617093018/https://www.bloomberg.com/view/articles/2017-04-11/tax-havens-can-be-surprisingly-close-to-home|archive-date=17 June 2018|url-status=live}}</ref>

[[File:Uncovering Offshore Financial Centers Figure 3 Network of ownership flows between countries.jpg|thumb|"Uncovering Offshore Financial Centers": CORPNET's map of connections between countries.<ref name="xx"/>]]

Traditional methods for identifying tax havens analyse tax and legal structures for [[Finance:Base erosion and profit shifting|base erosion and profit shifting]] (BEPS) tools. However, this approach follows a purely quantitative approach, ignoring any taxation or legal concepts, to instead follow a [[Big data|big data]] analysis of the ownership chains of 98 million global companies.  The technique gives both a method of classification and a method of understanding the relative scale – but not absolute scale – of havens/OFCs.<ref name="conversation"/><ref name="RTEconduit">{{cite journal | url=https://www.rte.ie/brainstorm/2017/0725/892887-these-countries-are-conduits-for-the-worlds-biggest-tax-havens/ | publisher=RTE News | date=25 September 2017 | title=The countries which are conduits for the biggest tax havens | journal=RTÉ.ie | access-date=25 April 2019 | archive-url=https://web.archive.org/web/20190426120033/https://www.rte.ie/brainstorm/2017/0725/892887-these-countries-are-conduits-for-the-worlds-biggest-tax-havens/ | archive-date=26 April 2019 | url-status=live }}</ref>

The results were published by the [[Organization:University of Amsterdam|University of Amsterdam]]'s CORPNET Group in 2017, and identified two classifications:<ref name="conversation"/><ref name="RTEconduit"/>

*  24 global sink OFCs: jurisdictions in which a "disproportional amount of value disappears from the economic system" (i.e. the traditional [[Finance:Tax haven|tax haven]]s).{{efn|See the table below for the list of the sinks.}}
*  Five global conduit OFCs: jurisdictions "through which a disproportional amount of value moves toward sink OFCs" (i.e. modern [[Finance:Corporate tax haven|corporate tax haven]]s).{{efn|The conduits are: Netherlands, United Kingdom, Switzerland, Singapore, and Ireland.}}

{{blockquote|Our findings debunk the myth of tax havens{{efn|name="def"|As discussed in the ''Definitions'' sections of tax havens, and of offshore financial centres, most tax academics consider the terms as being synonymous and use them inter–changeably}} as exotic far-flung islands that are difficult, if not impossible, to regulate. Many offshore financial centers{{efn|name="def"}} are highly developed countries with strong regulatory environments.|author=Javier Garcia-Bernardo, Jan Fichtner, Frank W. Takes & Eelke M. Heemskerk, CORPNET [[Organization:University of Amsterdam|University of Amsterdam]]<ref name="xx"/>}}

In 2017, the European Parliament adopted the CORPNET approach into their frameworks for addressing tax havens.<ref name="pana2"/> In 2018, research by [[Biography:Gabriel Zucman|Gabriel Zucman]] showed that using Orbis database connections specifically underestimates the scale of Ireland, which the [[Biography:Gabriel Zucman#Zucman-Tørsløv-Wier 2018 list|Zucman–Tørsløv–Wier 2018 list]] showed is the largest Conduit OFC in the world.<ref name="zuc"/><ref name="Irish Times"/><ref name="gabzucucwsj"/> This aside, CORPNET's Conduits and Sinks reconcile closely with the most noted academic top ten tax haven lists.

==Background==

[[File:Uncovering Offshore Financial Centers Cayman Conundrum.jpg|thumb|"Uncovering Offshore Financial Centers": The "Cayman Islands Conundrum".<ref name="xx"/>]]

The lack of an accepted [[Finance:Tax haven#Definitions|definition]] for identifying tax havens (and even offshore financial centres), results in different lists, including:

* Academic leaders in tax haven research:<ref name="eup">{{cite web|url=https://ec.europa.eu/info/sites/info/files/dp_055_en.pdf|title=Banks in Tax Havens: First Evidence based on Country–by–Country Reporting|page=50|quote=Figure D: Tax Haven Literature Review: A Typology|publisher=EU Commission|date=July 2017|access-date=15 August 2018|archive-url=https://web.archive.org/web/20180623170004/https://ec.europa.eu/info/sites/info/files/dp_055_en.pdf|archive-date=23 June 2018|url-status=live}}</ref> [[Biography:James R. Hines Jr.|Hines]] (1994, 2007, 2010)<ref name="h1">{{cite journal|url=https://repository.law.umich.edu/cgi/viewcontent.cgi?referer=https://www.google.ie/&httpsredir=1&article=1716&context=articles|title=Treasure Islands|pages=103–125|author=James R. Hines Jr.|quote=Table 1: 52 Tax Havens|journal=[[Finance:Journal of Economic Perspectives|Journal of Economic Perspectives]]|volume=4|issue=24|date=2010|author-link=James R. Hines Jr}}</ref><ref name="h2">{{cite web|url=http://www.bus.umich.edu/otpr/WP2007-3.pdf|title=Tax Havens|quote=There are roughly 45 major tax havens in the world today. Examples include Andorra, Ireland, Luxembourg and Monaco in Europe, Hong Kong and Singapore in Asia, and the Cayman Islands, the Netherlands Antilles, and Panama in the Americas.|author=James R. Hines Jr.|publisher=University of Michigan|date=2007|author-link=James R. Hines Jr|access-date=15 August 2018|archive-url=https://web.archive.org/web/20160924214243/http://www.bus.umich.edu/otpr/WP2007-3.pdf|archive-date=24 September 2016|url-status=live}}</ref><ref name="h3">{{cite journal|url=http://taxdoctoralseminar.web.unc.edu/files/2016/02/Hines-Rice.pdf|title=FISCAL PARADISE: FOREIGN TAX HAVENS AND AMERICAN BUSINESS|author1=James R. Hines Jr.|author2=Eric M. Rice|quote=We identify 41 countries and regions as tax havens for the purposes of U. S. businesses. Together the seven tax havens with populations greater than one million (Hong Kong, Ireland, Liberia, Lebanon, Panama, Singapore, and Switzerland) account for 80 percent of total tax haven population and 89 percent of tax haven GDP.|journal=Quarterly Journal of Economics (Harvard/MIT)|date=February 1994|volume=9|issue=1|access-date=15 August 2018|archive-url=https://web.archive.org/web/20170825172644/http://taxdoctoralseminar.web.unc.edu/files/2016/02/Hines-Rice.pdf|archive-date=25 August 2017|url-status=dead}}</ref> [[Biography:Dhammika Dharmapala|Dharmapala]] (2008, 2009),<ref name="d1">{{cite journal|author1=Dhammika Dharmapala|author2=James R. Hines Jr.|pages=1058–1068|volume=93|issue=9–10|url=http://faculty.smu.edu/millimet/classes/eco6375/papers/dharmapala%20hines.pdf|title=Which countries become tax havens?|journal=[[Finance:Journal of Public Economics|Journal of Public Economics]]|date=2009|doi=10.1016/j.jpubeco.2009.07.005|s2cid=16653726|author1-link=Dhammika Dharmapala|access-date=15 August 2018|archive-url=https://web.archive.org/web/20170808070113/http://faculty.smu.edu/millimet/classes/eco6375/papers/dharmapala%20hines.pdf|archive-date=8 August 2017|url-status=live}}</ref> and [[Biography:Gabriel Zucman|Zucman]] (2015, 2018).<ref name="gbz">{{cite web|url=http://gabriel-zucman.eu/missingprofits/|title=The Missing Profits of Nations|quote=Appendix Table 2: Tax Havens|page=31|author1=Gabriel Zucman|author2=Thomas Torslov|author3=Ludvig Wier|publisher=[[Organization:National Bureau of Economic Research|National Bureau of Economic Research]], Working Papers|date=June 2018|author1-link=Gabriel Zucman|access-date=15 August 2018|archive-url=https://web.archive.org/web/20190402221958/http://gabriel-zucman.eu/missingprofits/|archive-date=2 April 2019|url-status=live}}</ref><ref name="gabzucucwsj"/><ref name="Irish Times"/>
*  [[Organization:OECD|OECD]] lists: Started with 35 locations in 2000 (none of which were OECD members),<ref name="OECD havens">{{cite web|url=http://www.oecd.org/ctp/harmful/2090192.pdf|title=Towards Global Tax Co-operation|date=April 2000|page=17|publisher=[[Organization:OECD|OECD]]|quote=TAX HAVENS: 1.Andorra 2.Anguilla 3.Antigua and Barbuda 4.Aruba 5.Bahamas 6.Bahrain 7.Barbados 8.Belize 9.British Virgin Islands 10.Cook Islands 11.Dominica 12.Gibraltar 13.Grenada 14.Guernsey 15.Isle of Man 16.Jersey 17.Liberia 18.Liechtenstein 19.Maldives 20.Marshall Islands 21.Monaco 22.Montserrat 23.Nauru 24.Net Antilles 25.Niue 26.Panama 27.Samoa 28.Seychelles 29.St. Lucia 30.St. Kitts & Nevis 31.St. Vincent and the Grenadines 32.Tonga 33.Turks & Caicos 34.U.S. Virgin Islands 35.Vanuatu|access-date=2 April 2018|archive-url=https://web.archive.org/web/20180331040150/http://www.oecd.org/ctp/harmful/2090192.pdf|archive-date=31 March 2018|url-status=live}}</ref> but by 2017, only listed Trinidad & Tobago as a tax haven.<ref>{{cite news| url=https://www.ft.com/content/94d84054-5bf0-11e7-b553-e2df1b0c3220| title=Trinidad & Tobago left as the last blacklisted tax haven| newspaper=[[Social:Financial Times|Financial Times]]| author=Vanessa Houlder| quote=Alex Cobham of the [[Organization:Tax Justice Network|Tax Justice Network]] said: It's disheartening to see the OECD fall back into the old pattern of creating 'tax haven' blacklists on the basis of criteria that are so weak as to be near enough meaningless, and then declaring success when the list is empty".| date=September 2017| access-date=27 April 2019| archive-url=https://web.archive.org/web/20181215124710/https://www.ft.com/content/94d84054-5bf0-11e7-b553-e2df1b0c3220| archive-date=15 December 2018| url-status=live}}</ref>
*  IMF OFC lists:  Started with 46 OFCs in June 2000 using qualitative methods;<ref name="IMFJune2000">{{cite web|url=https://www.imf.org/external/np/mae/oshore/2000/eng/back.htm|title=Offshore Financial Centers: IMF Background Paper|publisher=[[Organization:International Monetary Fund|International Monetary Fund]]|date=23 June 2000|access-date=27 April 2019|archive-url=https://web.archive.org/web/20180823044230/http://www.imf.org/external/np/mae/oshore/2000/eng/back.htm|archive-date=23 August 2018|url-status=live}}</ref> refined to 22 OFCs in April 2007 using purely quantitive methods;<ref name="imf">{{cite journal|url=http://www.imf.org/external/pubs/ft/wp/2007/wp0787.pdf|title=Concept of Offshore Financial Centers: In Search of an Operational Definition|author=Ahmed Zoromé|publisher=[[Organization:International Monetary Fund|International Monetary Fund]]|quote=IMF Working Paper 07/87|date=1 April 2007|access-date=27 April 2019|archive-url=https://web.archive.org/web/20160407224029/http://www.imf.org/external/pubs/ft/wp/2007/wp0787.pdf|archive-date=7 April 2016|url-status=live}}</ref> listed the eight major OFCs in 2018 who handle 85% of all flows;<ref name="imfx">{{cite journal|url=http://www.imf.org/external/pubs/ft/fandd/2018/06/inside-the-world-of-global-tax-havens-and-offshore-banking/damgaard.htm|title=Piercing the Veil of Tax Havens|first1=Jannick|last1=Damgaard|first2=Thomas|last2=Elkjaer|first3=Niels|last3=Johannesen|journal=International Monetary Fund: Finance & Development Quarterly|quote=The eight major pass-through economies—the Netherlands, Luxembourg, Hong Kong SAR, the British Virgin Islands, Bermuda, the Cayman Islands, Ireland, and Singapore—host more than 85 percent of the world's investment in special purpose entities, which are often set up for tax reasons.|volume=55|issue=2|date=June 2018|access-date=27 April 2019|archive-url=https://web.archive.org/web/20180612142524/http://www.imf.org/external/pubs/ft/fandd/2018/06/inside-the-world-of-global-tax-havens-and-offshore-banking/damgaard.htm|archive-date=12 June 2018|url-status=live}}</ref> by 2010, the tax academics considered OFCs as synonymous with tax havens.<ref name="missing profits">{{cite journal|url=https://eml.berkeley.edu/~saez/course/zucman11.pdf|title=The Missing Wealth of Nations: Are Europe and The U.S. Net Debtors or Net Creditors?|author=Gabriel Zucman|journal=[[Finance:The Quarterly Journal of Economics|The Quarterly Journal of Economics]]|volume=128|issue=3|pages=1321–1364|date=August 2013|quote='Tax havens are low-tax jurisdictions that offer businesses and individuals opportunities for tax avoidance' (Hines, 2008). In this paper, I will use the expression 'tax haven' and 'offshore financial center' interchangeably (the list of tax havens considered by Dharmapala and Hines (2009) is identical to the list of offshore financial centers considered by the Financial Stability Forum (IMF, 2000), barring minor exceptions)|doi=10.1093/qje/qjt012|citeseerx=10.1.1.371.3828|access-date=27 April 2019|archive-url=https://web.archive.org/web/20170809133829/http://eml.berkeley.edu/~saez/course/zucman11.pdf|archive-date=9 August 2017|url-status=live}}</ref>
*  [[Organization:Institute on Taxation and Economic Policy|ITEP]] lists: Focus on offshore structures of US S&P500 firms, and list the Netherlands, Ireland, the Caribbean, and Luxembourg in their top five.<ref name="ITEP">{{cite web|url=https://itep.org/wp-content/uploads/offshoreshellgames2017.pdf|title=Offshore Shell Games 2017|quote=Amount of Tax Haven Connections (Figure 1, Page 11), Amount of Tax Haven Profits (Figure 4, Page 16)|author1=Richard Phillips|author2=Matt Gardner|author3=Alexandria Robins|author4=Michelle Surka|publisher=[[Organization:Institute on Taxation and Economic Policy|Institute on Taxation and Economic Policy]]|date=2017}}</ref>

There are "traditional" tax havens common on all these lists (e.g. some Caribbean and Channel Islands locations), which some global regulators have either blacklisted, or have issued formal warnings/threat of sanctions against, unless transparency is increased.<ref>{{cite news | url=https://www.theguardian.com/business/2017/dec/05/eu-blacklist-names-17-tax-havens-and-puts-caymans-and-jersey-on-notice | title=EU blacklist names 17 tax havens and puts Caymans and Jersey on notice | newspaper=The Guardian | date=5 December 2017 | author=Daniel Boffey | access-date=27 April 2019 | archive-url=https://web.archive.org/web/20190407180336/https://www.theguardian.com/business/2017/dec/05/eu-blacklist-names-17-tax-havens-and-puts-caymans-and-jersey-on-notice | archive-date=7 April 2019 | url-status=live }}</ref><ref>{{cite news | url=https://www.theguardian.com/world/2017/dec/02/paradise-to-blacklist-eu-tax-havens | title=From paradise to blacklist: EU's net starts to close on tax havens | newspaper=The Guardian | date=2 December 2017 | access-date=27 April 2019 | author=Juliette Garside | archive-url=https://web.archive.org/web/20190501195529/https://www.theguardian.com/world/2017/dec/02/paradise-to-blacklist-eu-tax-havens | archive-date=1 May 2019 | url-status=live }}</ref>

However, a key difference between the lists regards the major OECD and EU tax havens (or offshore financial centres), such as Switzerland, Ireland the Netherlands and Luxembourg (amongst others).<ref>{{cite web | url=https://www.caymancompass.com/2017/08/01/new-study-offers-more-nuanced-look-at-offshore-finance/ | title=New study offers more nuanced look at offshore finance | publisher=Cayman Compass | date=1 August 2017 | author=Ken Silva | quote=When offshore financial centers receive criticism for being "tax havens", they often counter by pointing to larger countries in Europe and elsewhere that practice many of the same policies decried by the international community.  A new study compiled by researchers at the University of Amsterdam buttresses that counter-argument, naming the U.K., Ireland, the Netherlands and other developed countries as places that facilitate tax avoidance | access-date=2 April 2018 | archive-url=https://web.archive.org/web/20180402230212/https://www.caymancompass.com/2017/08/01/new-study-offers-more-nuanced-look-at-offshore-finance/ | archive-date=2 April 2018 | url-status=live }}</ref> Major regulators like the EU and the OECD don't regard OECD or EU countries as tax havens, and point to their transparency and compliance with international regulations.<ref>{{cite news|url=https://www.independent.ie/business/irish/there-is-a-definition-of-a-tax-haven-and-ireland-doesnt-make-that-grade-35095264.html|title=There is a definition of a tax haven - and Ireland doesn't make that grade|newspaper=Irish Independent|author=Suzanne Kelly|date=2 October 2017|access-date=2 April 2018|archive-url=https://web.archive.org/web/20180326202838/https://www.independent.ie/business/irish/there-is-a-definition-of-a-tax-haven-and-ireland-doesnt-make-that-grade-35095264.html|archive-date=26 March 2018|url-status=live}}</ref><ref>{{cite news|url=http://www.thejournal.ie/oced-ireland-tax-haven-1005122-Jul2013/|title=OECD tax chief: 'Ireland is not a tax haven'|newspaper=TheJournal.ie|date=23 July 2013|access-date=27 April 2019|author=Hugh O'Connell|archive-url=https://web.archive.org/web/20180427201152/http://www.thejournal.ie/oced-ireland-tax-haven-1005122-Jul2013/|archive-date=27 April 2018|url-status=live}}</ref><ref>{{cite web|url=https://euobserver.com/economic/140279|title=EU countries are not 'tax havens', parliament says|publisher=EUobserver|author=Caterina Tani|date=14 December 2017|access-date=27 April 2019|archive-url=https://web.archive.org/web/20180627144450/https://euobserver.com/economic/140279|archive-date=27 June 2018|url-status=live}}</ref><ref>{{cite web|url=https://nltimes.nl/2017/12/06/eu-releases-tax-haven-blacklist-netherlands|title=EU RELEASES TAX HAVEN BLACKLIST; NETHERLANDS NOT ON IT|work=NL Times|date=6 December 2017| access-date=27 April 2019 | author=Jane Paters}}</ref>

Academic leaders in tax haven research, and other non–governmental organizations, point to the role of OECD and EU tax havens in tax avoidance from [[Finance:Base erosion and profit shifting|base erosion and profit shifting]] (BEPS) schemes, like the Double Irish, the [[Finance:Double Irish arrangement#Replacement by Single Malt|Single Malt]] and the [[Finance:Dutch Sandwich|Dutch Sandwich]].<ref>{{cite news|url=http://www.thejournal.ie/oxfam-tax-haven-3133714-Dec2016/|title=Ireland named world's 6th worst corporate tax haven|newspaper=TheJournal.ie|date=12 December 2016|access-date=2 April 2018|archive-url=https://web.archive.org/web/20180326202524/http://www.thejournal.ie/oxfam-tax-haven-3133714-Dec2016/|archive-date=26 March 2018|url-status=live}}</ref><ref>{{cite news|url=https://www.irishtimes.com/business/economy/oxfam-says-ireland-is-a-tax-haven-judged-by-eu-criteria-1.3307370?mode=sample&auth-failed=1&pw-origin=https%3A%2F%2Fwww.irishtimes.com%2Fbusiness%2Feconomy%2Foxfam-says-ireland-is-a-tax-haven-judged-by-eu-criteria-1.3307370|title=Oxfam says Ireland is a tax haven judged by EU criteria|newspaper=The Irish Times|date=28 November 2017|access-date=2 April 2018|archive-url=https://web.archive.org/web/20180424215233/https://www.irishtimes.com/business/economy/oxfam-says-ireland-is-a-tax-haven-judged-by-eu-criteria-1.3307370?mode=sample&auth-failed=1&pw-origin=https%3A%2F%2Fwww.irishtimes.com%2Fbusiness%2Feconomy%2Foxfam-says-ireland-is-a-tax-haven-judged-by-eu-criteria-1.3307370|archive-date=24 April 2018|url-status=live}}</ref><ref>{{cite web|url=https://www.oxfamireland.org/sites/default/files/upload/pdfs/mantras-myths-final.pdf|title=MANTRAS AND MYTHS: A true picture of the corporate tax system in Ireland|publisher=RTE News|date=February 2017|access-date=7 April 2018|archive-url=https://web.archive.org/web/20171003211040/https://www.oxfamireland.org/sites/default/files/upload/pdfs/mantras-myths-final.pdf|archive-date=3 October 2017|url-status=live}}</ref> They regard them as major tax havens in their [[Finance:Tax haven#Definitions|definitions of tax havens]].<ref name="Irish Times"/><ref name="gabzucucwsj"/>

==CORPNET Report{{anchor|CORPNET Report}}==
[[File:Offshore Financial Centre Chains.png|thumb|"Uncovering Offshore Financial Centers": Example of a corporate global ownership chain.<ref name="xx"/>]]

A report published in Nature in 2017 on the analysis of offshore financial centres called: "Uncovering Offshore Financial Centers: Conduits and Sinks in the Global Corporate Ownership Network",<ref name="xx">{{cite journal|author1=Javier Garcia-Bernardo|author2=Jan Fichtner|author3=Frank W. Takes|author4=Eelke M. Heemskerk|volume=7|issue=6246|pages=6246|title=Uncovering Offshore Financial Centers: Conduits and Sinks in the Global Corporate Ownership Network|journal=Scientific Reports|date=24 July 2017|bibcode=2017NatSR...7.6246G|arxiv=1703.03016|doi=10.1038/s41598-017-06322-9|pmid=28740120|pmc=5524793}}</ref> provided a quantitative and scientific approach to the classification of tax havens.<ref>{{cite web|url=https://corpnet.uva.nl/ofc/|title=Offshore Financial Centers and the Five Largest Value Conduits in the World|publisher=CORPNET|date=24 July 2017|access-date=2 April 2018|archive-url=https://web.archive.org/web/20180403051643/https://corpnet.uva.nl/ofc/|archive-date=3 April 2018|url-status=live}}</ref><ref name="rr">{{cite web|url=https://www.ofcmeter.org/|title=What is an OFC Conduit and Sinks|publisher=CORPNET|date=2017|access-date=2 April 2018|archive-url=https://web.archive.org/web/20180325065701/https://www.ofcmeter.org/|archive-date=25 March 2018|url-status=live}}</ref><ref name="guar"/><ref name="bloom2"/>

The report was the result of a multi-year investigation by political economists and computer scientists in the CORPNET research group at the University of Amsterdam.  CORPNET is a European Research Council funded group at the University of Amsterdam investigating networks of corporate control.<ref name="bloom"/><ref>{{cite web|url=http://www.ifcreview.com/restricted.aspx?articleId=12682|title=Sinks and Conduits: Identifying Offshore Financial Centres by using Big Data|publisher=The IFC Review|date=1 March 2018|access-date=27 April 2019|archive-url=https://web.archive.org/web/20180617015500/http://www.ifcreview.com/restricted.aspx?articleId=12682|archive-date=17 June 2018|url-status=live}}</ref>

The report used the Moody's Orbis corporate database,<ref>{{cite web | url=https://www.bvdinfo.com/en-us/blog/transfer-pricing/nature-paper-uses-orbis-for-new-data-driven-approach-to-identify-offshore-financial-centres | title=How researchers have used Orbis to uncover offshore financial centres | publisher=Moodys BUREAU VAN DIJK | date=22 August 2017 | author=Alistair King | access-date=27 April 2019 | archive-url=https://web.archive.org/web/20190427173810/https://www.bvdinfo.com/en-us/blog/transfer-pricing/nature-paper-uses-orbis-for-new-data-driven-approach-to-identify-offshore-financial-centres | archive-date=27 April 2019 | url-status=live }}</ref> to examine 98 million global companies and their 71 million ownership connections (using [[Big data|big data]] computer modelling) to identify 5 global Conduit OFCs (Netherlands, United Kingdom, Ireland, Singapore and Switzerland). These are countries of high financial reputation (i.e. not formally labelled "tax havens" by OECD/EU), but who have "advanced" legal and tax structuring vehicles (and SPVs) that help legally route funds to the 24 tax havens (called Sink OFCs), without incurring tax in the Conduit OFC (or even tax in the source of funds location, where [[Social:Royalty payment|royalty payment]] schemes can be used).<ref name="xx"/><ref name="conversation">{{cite web|url=https://theconversation.com/these-five-countries-are-conduits-for-the-worlds-biggest-tax-havens-79555|title=These five countries are conduits for the world's biggest tax havens|publisher=The Conversation|date=7 November 2017|access-date=27 April 2019|author=Professor Eelke Heemskerk|archive-url=https://web.archive.org/web/20180706162001/http://theconversation.com/these-five-countries-are-conduits-for-the-worlds-biggest-tax-havens-79555|archive-date=6 July 2018|url-status=live}}</ref>

The work built on methods established in the "Offshore–Intensity Ratio",<ref name="fir">{{cite journal | url=https://www.city.ac.uk/__data/assets/pdf_file/0011/287138/CITYPERC-WPS-201502.pdf | title=The Offshore–Intensity Ratio Identifying the Strongest Magnets for Foreign Capital | publisher=[[Organization:City, University of London|City, University of London]] | date=2015 | author=Jan Fichtner | ssrn=2928027 | access-date=27 April 2019 | archive-url=https://web.archive.org/web/20151003212358/http://www.city.ac.uk/__data/assets/pdf_file/0011/287138/CITYPERC-WPS-201502.pdf | archive-date=3 October 2015 | url-status=live }}</ref> and in particular the understanding "activity" relative to the "scale" of the domestic economy in a country.<ref>{{cite web|url=https://corpnet.uva.nl/apple-multinationals-avoid-taxes-accountability-network-study-offshore-finance/|title=How Apple and Other Multinationals Avoid Taxes and Accountability: A Network Study of Offshore Finance|publisher=CORPNET|date=27 September 2016|access-date=15 April 2018|archive-url=https://web.archive.org/web/20180416012244/https://corpnet.uva.nl/apple-multinationals-avoid-taxes-accountability-network-study-offshore-finance/|archive-date=16 April 2018|url-status=live}}</ref> At its crudest level, the Offshore-Intensity Ratio explains why the countries at the top of global GDP per capita lists are mostly [[Finance:Tax haven#GDP-per-capita|tax havens]].

The EU Parliament's Policy Department on Economic and Scientific Policies included the research in its findings for the EU Committee on Money laundering, tax avoidance and tax evasion (PANA),<ref name="pana1">{{cite web|url=http://www.eppgroup.eu/PANA|title=PANA Committee on Money laundering, tax avoidance and tax evasion|publisher=EU Parliament|date=2018|access-date=15 April 2018|archive-url=https://web.archive.org/web/20180415191048/http://www.eppgroup.eu/PANA|archive-date=15 April 2018|url-status=dead}}</ref> and by tabulating against existing EU–IMF–FSI list of tax havens, showed material gaps in EU understanding of conduits.<ref name="pana2">{{cite web|url=http://www.europarl.europa.eu/cmsdata/115250/PANA%202016-04%20ST%20Offshore%20activities%20Final.pdf| title=Offshore activities and money laundering: recent findings and challenges|pages=39–42|publisher=European Parliament | quote=Section 7.1. Offshore Centers are a European problem: [..] Against the idea of OFCs as exotic Caribbean islands, the authors show that many OFCs are highly developed countries. | date=March 2017 |access-date=27 April 2019 | author=Professor Brigitte Unger| }}</ref>

CORPNET's top 5 Conduits and top 5 Sinks are 9 of the 10 largest tax havens identified in 2010 by one of the academic founders of tax haven research, [[Biography:James R. Hines Jr.|James R. Hines Jr.]]  Hines' 2010 list of [[Biography:James R. Hines Jr.#Hines 2010 list|10 major tax havens]] only differs in its omission of the U.K., which in 2010, had only just reformed its corporate tax system.<ref name="h1"/> CORPNET's top 5 Conduits and top 5 Sinks closely reconcile with the [[Finance:Corporate haven#Corporate tax haven lists|top 10 major corporate tax havens]] of other major academic and non–governmental organisation tax haven lists.  Other tax academics have incorporated the research into their understanding of tax havens.<ref name="WPaidan.regan">{{cite news|url=https://www.washingtonpost.com/politics/2019/04/25/ireland-is-tax-haven-thats-becoming-controversial-home/?noredirect=on|title=Ireland is a tax haven – and that's becoming controversial at home|author=Aidan Regan|newspaper={{wipe|The Washington Post}}|date=25 April 2019|access-date=25 April 2019|quote=As the recent research of Gabriel Zucman and the CORPNET research team at the University of Amsterdam shows, Ireland is a "conduit tax haven", acting as a tax-avoiding funnel between nation-states and enabling the transfer of capital without taxation}}</ref>

==Conduit OFCs{{anchor|Conduit OFC}}==
[[File:GIPC Intellectual Property 2018 (Patents Sub-Category).png|thumb|2018 Global Innovation Property Centre (GIPC) Legal Systems League Table: ''Patents'' Sub-Category.<ref name="gipc1">{{cite web|url=https://www.theglobalipcenter.com/wp-content/uploads/2018/02/GIPC_IP_Index_2018.pdf|title=U.S. Chamber International IP Index, 6th Edition, 2018|publisher=Global Intellectual Property Center|date=February 2018|page=6|access-date=27 April 2019|archive-url=https://web.archive.org/web/20181218015504/http://www.theglobalipcenter.com/wp-content/uploads/2018/02/GIPC_IP_Index_2018.pdf|archive-date=18 December 2018|url-status=live}}</ref>]]
Conduit OFCs are described as having advanced legal and tax systems designed to enable corporations to route funds from high tax locations (e.g. Germany) to the sink OFCs (e.g. Bermuda). They tend to have attractive "holding company" regimes (e.g. no withholding taxes, foreign dividends exempt from taxes, capital gains reliefs, full double–tax relief), advanced tax treatment of intellectual property regimes, and large global networks of bilateral tax treaties.<ref name="xx"/><ref>{{cite news| url=https://www.huffingtonpost.com/entry/these-five-countries-are-conduits-for-the-worlds-biggest_us_5975f0aee4b0f1feb89b4500| title=These Five Countries Are Conduits for the World's Biggest Tax Havens| work=HuffPost| date=24 July 2017| access-date=2 April 2018| archive-url=https://web.archive.org/web/20180403095847/https://www.huffingtonpost.com/entry/these-five-countries-are-conduits-for-the-worlds-biggest_us_5975f0aee4b0f1feb89b4500| archive-date=3 April 2018| url-status=live}}</ref><ref name="ft1">{{cite news| url=https://www.ft.com/content/b83e697a-c625-11e7-b2bb-322b2cb39656| title=Stranger than paradise: the truth about tax| newspaper=[[Social:Financial Times|Financial Times]]| date=10 November 2017| author=Editorial| access-date=27 April 2019| archive-url=https://web.archive.org/web/20180616180420/https://www.ft.com/content/b83e697a-c625-11e7-b2bb-322b2cb39656| archive-date=16 June 2018| url-status=live}}</ref>

For example, CORPNET's five major conduit OFCs, all have a top–ten ranking in the 2018 [[Organization:Global Intellectual Property Center|Global Innovation Property Centre]] (GIPC) IP Index.<ref name="gipc1"/><ref>{{cite web|url=http://www.theglobalipcenter.com/wp-content/uploads/2018/02/GIPC_IP_Index_2018.pdf|title=GIPC IP Index 2018|date=February 2018|author=United States Chamber of Commerce|quote=Figure I: U.S. Chamber International IP Index 2018, Overall Scores|page=6|access-date=28 September 2018|archive-url=https://web.archive.org/web/20180521021413/http://www.theglobalipcenter.com/wp-content/uploads/2018/02/GIPC_IP_Index_2018.pdf|archive-date=21 May 2018|url-status=live}}</ref> IP has been described as the "raw materials of corporate tax avoidance",<ref name="raw">{{cite web| url=https://www.bnrbeurs.nl/2017/02/22/the-corporate-tax-avoidance-toolbox/| title=The Corporate Tax Avoidance Toolbox| publisher=B&R Beurs| date=2018| access-date=2 April 2018| archive-url=https://web.archive.org/web/20180616180418/https://www.bnrbeurs.nl/2017/02/22/the-corporate-tax-avoidance-toolbox/| archive-date=16 June 2018| url-status=live}}</ref> and "the leading corporate tax avoidance vehicle".<ref name="ucla">{{cite journal | url=https://www.uclalawreview.org/pdf/62-1-1.pdf | page=4 | title=Intellectual Property Law Solutions to Tax Avoidance | journal=UCLA Law Review | volume=62 | issue=2 | date=2015 | author=Andrew Blair-Stanek | quote=Intellectual property (IP) has become the leading tax avoidance vehicle in the world today. | access-date=28 September 2018 | archive-url=https://web.archive.org/web/20150316232500/http://www.uclalawreview.org/pdf/62-1-1.pdf | archive-date=16 March 2015 | url-status=live }}</ref><ref name="fordam">{{cite web | url=http://www.fordhamiplj.org/2016/08/30/ip-tax-avoidance-ireland/ | author=Ted Mulvany | title=Intellectual Property and Tax Avoidance in Ireland | publisher=Fordham Intellectual Property, Media & Entertainment Law Journal | date=30 August 2016 | access-date=27 April 2019 | archive-url=https://web.archive.org/web/20190502112434/http://www.fordhamiplj.org/2016/08/30/ip-tax-avoidance-ireland/ | archive-date=2 May 2019 | url-status=live }}</ref>

Conduit OFCs are shown to be dominated by major law firms and global accounting firms, who create the lawfully constructed special purpose vehicles (SPVs) and BEPS tools that make the connections with the sink OFCs, by exploiting legislative loopholes such as the Double Irish and [[Finance:Dutch Sandwich|Dutch Sandwich]]. They advise clients on anticipating future changes (e.g. from OECD BEPS processes), that may need new loopholes (e.g. the single malt arrangement).<ref name="apple">{{cite news|url=https://www.nytimes.com/2017/11/06/world/apple-taxes-jersey.html|title=After a Tax Crackdown, Apple Found a New Shelter for Its Profits|newspaper={{wipe|The New York Times}}|date=6 November 2017|author1=Jesse Drucker|author2=Simon Bowers|access-date=27 April 2019|archive-url=https://web.archive.org/web/20171106192019/https://www.nytimes.com/2017/11/06/world/apple-taxes-jersey.html|archive-date=6 November 2017|url-status=live}}</ref><ref name="xx"/>

Other researchers into tax havens have written that professional service firms in the major OECD and EU tax havens write most of their state's relevant taxation and SPV-related legislation, so that they can create and protect loopholes, and refer to such jurisdictions as being a "captured" by their financial services industry.<ref>{{cite news|url=https://www.theguardian.com/business/2011/jan/09/explainer-what-is-tax-haven|quote=This political capture produces one of the great offshore paradoxes: these zones of ultra-freedom are often highly repressive places, wary of scrutiny and intolerant of criticism.| title=Explainer: what is a tax haven? The most important feature of a secrecy jurisdiction is that local politics is captured by financial services interests | newspaper=The Guardian | date=9 January 2011 | author=Nicholas Shaxson | access-date=27 April 2019|author-link=Nicholas Shaxson}}</ref><ref name="jason">{{cite book|title=Havens in a Storm: The Struggle for Global Tax Regulation|author=Jason Sharman|year=2006|publisher=Cornell University Press|pages=224|jstor=10.7591/j.ctt7z6jm|chapter=The Struggle for Global Tax Regulation|isbn=9780801445040}}</ref> The legal and tax structuring undertaken by conduit OFCs is considered beyond the trust–structuring type work of the traditional tax haven "[[Finance:Offshore magic circle|offshore magic circle]]" law firms.  Conduit OFCs need structures that can integrate with bilateral tax treaties involving G20 countries, as well as meeting U.S. GAAP / SEC Regulations that U.S. multinationals, one of the largest users of conduit OFCs, need to adhere to.<ref>{{Cite book | publisher = Cornell University Press |isbn = 978-0-8014-7612-9 |author1=Ronen Palan |author2=Richard Murphy |author3=Christian Chavagneux | title = Tax Havens: How Globalization Really Works | year = 2009|author1-link = Ronen Palan }}</ref><ref>{{Cite book | author=Nicholas Shaxson | title = Treasure Islands: Uncovering the Damage of Offshore Banking and Tax Havens | publisher = Palgrave Macmillan | year=2011 | isbn = 978-0-230-10501-0 | title-link = Treasure Islands: Tax Havens and the Men Who Stole the World | author-link = Nicholas Shaxson }}</ref>

CORPNET's top five global conduit OFCs channel 47% of corporate offshore connections and include the following:<ref name="xx"/><ref>{{cite web| url=http://www.uva.nl/en/content/news/press-releases/2017/07/highly-developed-countries-canalise-almost-50-of-equity-flows-to-tax-havens.html| title=Highly developed countries canalise almost 50% of equity flows to tax havens| publisher=CORPNET| date=24 July 2017| access-date=2 April 2018| archive-url=https://web.archive.org/web/20180403051552/http://www.uva.nl/en/content/news/press-releases/2017/07/highly-developed-countries-canalise-almost-50-of-equity-flows-to-tax-havens.html| archive-date=3 April 2018| url-status=live}}</ref>
{{ordered list|type=lower-roman



| {{flagcountry|CHE|1912}} – a major conduit OFC with a very dense network of connections with Jersey, the fourth-largest sink OFC.<ref name="guar"/><ref name="xx"/>

| {{flagcountry|SGP|1912}} – the main conduit OFC for Asia, and densely connected to the two major Asian sink OFCs of Hong Kong and Taiwan.<ref name="xx"/>

| {{flagcountry|IRE|1912}} – very dense connections with the US (see [[Finance:Ireland as a tax haven|Ireland as a tax haven]]),<ref name="guar"/> with very dense connections to sink OFC Luxembourg, an established "backdoor" out of the Irish tax system.<ref>{{cite web|url=https://www.imf.org/en/Publications/CR/Issues/2018/06/28/Ireland-Selected-Issues-46027|page=20|quote=Figure 3. Foreign Direct Investment - Over half of Irish outbound FDI is routed to Luxembourg|title=Ireland:Selected Issues|publisher=[[Organization:International Monetary Fund|International Monetary Fund]]|date=June 2018|access-date=6 July 2018|archive-url=https://web.archive.org/web/20180706132549/https://www.imf.org/en/Publications/CR/Issues/2018/06/28/Ireland-Selected-Issues-46027|archive-date=6 July 2018|url-status=live}}</ref><ref>{{cite web|url=http://www.financialsecrecyindex.com/PDF/Ireland.pdf|title=Financial Secrecy Index 2018:IRELAND|publisher=[[Organization:Tax Justice Network|Tax Justice Network]]|date=February 2018|access-date=26 April 2018|archive-url=https://web.archive.org/web/20180426144323/http://www.financialsecrecyindex.com/PDF/Ireland.pdf|archive-date=26 April 2018|url-status=live}}</ref>
}}

==Sink OFCs{{anchor|Sink OFC}}==
[[File:List of sink-OFCs, ordered by sink centrality value.png|thumb|"Uncovering Offshore Financial Centers": List of Sink OFCs ordered by value (showing U.K. dependencies).<ref name="xx"/>]]

Sink OFCs cover a broad range of locations from very small countries (e.g. the Marshall Islands), to major global financial centres (e.g. Hong Kong).<ref name="xx"/>

Just because funds reach a Sink OFC, does not mean that they remain dormant. Quite the contrary, the funds can be invested in assets all over the world, but their legal ownership and future gains remain in the Sink OFC.  For example, the circa US$1 trillion of US company offshore cash is held in Sink OFCs (esp. the Caribbean).<ref>{{cite web|url=https://www.mckinsey.com/business-functions/strategy-and-corporate-finance/our-insights/the-real-story-behind-us-companies-off-shore-cash-reserves|title=The real story behind US companies' offshore cash reserves|publisher=McKinsey & Company|date=June 2017|access-date=27 April 2019|archive-url=https://web.archive.org/web/20180813180122/https://www.mckinsey.com/business-functions/strategy-and-corporate-finance/our-insights/the-real-story-behind-us-companies-off-shore-cash-reserves|archive-date=13 August 2018|url-status=live}}</ref><ref>{{cite web | url=https://www.theguardian.com/business/2016/may/20/us-corporate-giants-hoarding-over-a-trillion-dollars-apple-microsoft-google | title=US corporate giants hoarding more than a trillion dollars | work=The Guardian | author=Jill Treanor | date=20 May 2016 | quote=Moody's report says 72% of the money held by Apple, Google and other American companies is being parked offshore for tax reasons | access-date=2 April 2018 | archive-url=https://web.archive.org/web/20180325232158/https://www.theguardian.com/business/2016/may/20/us-corporate-giants-hoarding-over-a-trillion-dollars-apple-microsoft-google | archive-date=25 March 2018 | url-status=live }}</ref>

The CORPNET Report highlighted some interesting aspects of the 24 Sink OFCs:<ref name="xx"/>
{{ordered list|type=lower-roman
| British Virgin Islands – in terms of connections, the BVI was the "Netherlands of sink OFCs" and heavily linked with the conduit OFC United Kingdom.
| Luxembourg and [[Place:Hong Kong|Hong Kong]] – could have been considered conduit OFCs, but CORPNET's research showed they are even bigger sink OFCs (i.e. long-term homes for funds) for routing funds out of high-tax EU countries (Luxembourg) and out of China (Hong Kong).
| Jersey – remains a unique link with major conduit OFC, Switzerland (because the study could not capture individual "Jersey trusts", it noted that the scale of Jersey could still be understated).
| Bermuda, British Virgin Islands, [[Finance:Cayman Islands|Cayman Islands]] Triad – these three traditional tax havens are heavily interlinked and starting to present as one large Sink OFC.
| Taiwan – has been a controversial entrant on several tax haven lists, and is identified as the 2nd largest Asian Sink OFC.
| Cayman Islands – the Cayman Islands are becoming the biggest financial centre for Central and Latin America.<ref>{{cite web|url=http://blogs.lse.ac.uk/latamcaribbean/2017/11/02/the-cayman-conundrum-why-is-one-tiny-archipelago-the-largest-financial-centre-in-latin-america-and-the-caribbean/|title=The Cayman conundrum: why is one tiny archipelago the largest financial centre in Latin America and the Caribbean?|publisher=[[Organization:London School of Economics|London School of Economics]]|date=November 2017|access-date=27 April 2019|author=Jan Fichtner|quote=In a recent research paper, the CORPNET project analysed how millions of multinational corporations structure their global ownership chains. We found that Cayman acts as a 'sink' offshore financial centre that attracts and 'retains' foreign capital and/or where data trails often end. Large multinational agriculture commodity companies such as Bunge or Cargill that are active in the Amazon basin (e.g. in soy production) use the Cayman Islands in their global corporate ownership chains, thus most likely undermining the sustainability of a key global environmental commons|archive-url=https://web.archive.org/web/20180825115219/http://blogs.lse.ac.uk/latamcaribbean/2017/11/02/the-cayman-conundrum-why-is-one-tiny-archipelago-the-largest-financial-centre-in-latin-america-and-the-caribbean/|archive-date=25 August 2018|url-status=live}}</ref> 
| Malta – the report highlights the rise of sink OFC Malta as an emerging tax haven "inside" the EU,<ref>{{cite news| url=https://www.maltatoday.com.mt/news/national/79320/scientists_find_name_for_maltas_tax_haven_rep_#.WsIY14jwZPY| title=Scientists have found a way of showing how Malta is a global top ten tax haven| newspaper=Malta Today| date=31 July 2017| access-date=2 April 2018| archive-url=https://web.archive.org/web/20180403051427/https://www.maltatoday.com.mt/news/national/79320/scientists_find_name_for_maltas_tax_haven_rep_#.WsIY14jwZPY| archive-date=3 April 2018| url-status=live}}</ref><ref>{{cite news|url=https://www.timesofmalta.com/articles/view/20170729/local/malta-is-main-eu-tax-haven-study.654369|title=Malta is a Tax Haven, major new study|newspaper=Times of Malta|date=29 July 2017|access-date=14 April 2018|archive-url=https://web.archive.org/web/20180716224154/https://www.timesofmalta.com/articles/view/20170729/local/malta-is-main-eu-tax-haven-study.654369|archive-date=16 July 2018|url-status=live}}</ref> which has been a source of wider media scrutiny.<ref>{{cite news|url=https://www.timesofmalta.com/articles/view/20170520/local/malta-is-a-target-for-italian-mafia-russia-loan-sharks-damning-report.648474|title=Malta is a target for Italian mafia, Russia loan sharks, damning probe says|newspaper=Times of Malta|date=20 May 2017|access-date=2 April 2018|archive-url=https://web.archive.org/web/20180708191923/https://www.timesofmalta.com/articles/view/20170520/local/malta-is-a-target-for-italian-mafia-russia-loan-sharks-damning-report.648474|archive-date=8 July 2018|url-status=live}}</ref>
| [[Earth:Mauritius|Mauritius]] – has become a major Sink OFC for both SE Asia (especially India), and African economies, and now ranking 8th overall.<ref>{{cite news|url=https://www.theguardian.com/business/2013/nov/03/deloittes-tax-savings-investments-in-poor-countries|title=Deloitte promotes Mauritius as tax haven to avoid big payouts to poor African nations|newspaper=The Guardian|date=3 November 2013 | author=Jamie Doward | access-date=27 April 2019}}</ref>
}}

==OECD failings==
{{quote box
|width=19em|border=1px|align=right|bgcolor=#c6dbf7|qalign=left
|quote = Of the wider tax environment, O'Rourke thinks the OECD base–erosion and profit–shifting (BEPS) process is "very good" for Ireland.  "If BEPS sees itself to a conclusion, it will be good for Ireland".
|salign=left
|source=[[Biography:Feargal O'Rourke|Feargal O'Rourke]] CEO PwC (Ireland)<br>Cited "architect" of the Double Irish BEPS tool<ref name="for0">{{cite web|url=https://www.bloomberg.com/news/articles/2013-10-28/man-making-ireland-tax-avoidance-hub-globally-proves-local-hero|title=Man Making Ireland Tax Avoidance Hub Proves Local Hero|publisher={{wipe|Bloomberg News}}|date=28 October 2013|author=Jesse Drucker|access-date=27 April 2019|archive-url=https://web.archive.org/web/20180612234526/https://www.bloomberg.com/news/articles/2013-10-28/man-making-ireland-tax-avoidance-hub-globally-proves-local-hero|archive-date=12 June 2018|url-status=live}}</ref><ref name="for1">{{cite news | url=https://www.independent.ie/business/irish/controversial-tax-strategies-brainchild-of-orourkes-son-29721835.html | title=Controversial tax strategies brainchild of O'Rourke's son | newspaper=Irish Independent | date=3 November 2013 | author=Editorial | access-date=27 April 2019 | archive-url=https://web.archive.org/web/20180920120538/https://www.independent.ie/business/irish/controversial-tax-strategies-brainchild-of-orourkes-son-29721835.html | archive-date=20 September 2018 | url-status=live }}</ref><br>Irish Times, 2015<ref name="fer">{{cite news|url=https://www.irishtimes.com/business/financial-services/scion-of-a-prominent-political-dynasty-who-gave-his-vote-to-accountancy-1.2203820?mode=sample&auth-failed=1&pw-origin=https%3A%2F%2Fwww.irishtimes.com%2Fbusiness%2Ffinancial-services%2Fscion-of-a-prominent-political-dynasty-who-gave-his-vote-to-accountancy-1.2203820|title=Scion of a prominent political dynasty who gave his vote to accountancy|newspaper=The Irish Times|date=8 May 2015|author=Fiona Redden|access-date=27 April 2019|archive-url=https://web.archive.org/web/20180612152414/https://www.irishtimes.com/business/financial-services/scion-of-a-prominent-political-dynasty-who-gave-his-vote-to-accountancy-1.2203820?mode=sample&auth-failed=1&pw-origin=https%3A%2F%2Fwww.irishtimes.com%2Fbusiness%2Ffinancial-services%2Fscion-of-a-prominent-political-dynasty-who-gave-his-vote-to-accountancy-1.2203820|archive-date=12 June 2018|url-status=live}}</ref>
}}

An example of an IP–based [[Finance:Base erosion and profit shifting|BEPS tool]] is Ireland's [[Finance:Double Irish arrangement#Backstop of capital allowances|Capital Allowances for Intangible Assets]] (CAIA) tool, also known as the "[[Finance:Ireland as a tax haven#Green Jersey|Green Jersey]]", which has an [[Finance:Corporation tax in the Republic of Ireland#Effective tax rate (ETR)|effective tax rate]] of 0–2.5%.  Apple used the CAIA (or Green Jersey) BEPS tool in Q1 2015, resulting in the "[[Finance:Leprechaun economics|leprechaun economics]]" restatement of Irish GDP by 34.4 percent.  Ireland has other IP–based [[Finance:Base erosion and profit shifting|BEPS tools]] (Ireland as the first OECD nexus-compliant [[Finance:Corporation tax in the Republic of Ireland#Knowledge Development Box|KDB]]),<ref>{{cite news|url=https://www.independent.ie/business/irish/oecd-gives-cautious-welcome-to-knowledge-box-tax-scheme-30685281.html|title=OECD gives cautious welcome to Irish Knowledge Box tax scheme|newspaper=Irish Independent|author=Colm Kelpie|date=23 October 2014|access-date=27 April 2019|archive-url=https://web.archive.org/web/20180513224146/https://www.independent.ie/business/irish/oecd-gives-cautious-welcome-to-knowledge-box-tax-scheme-30685281.html|archive-date=13 May 2018|url-status=live}}</ref> and is a supporter of the [[Finance:Base erosion and profit shifting (OECD project)|OECD BEPS project]] (see box).<ref name="fer"/>

==Isle of Man omitted==
The Isle of Man (the "IOM") was absent from the list of top sink OFCs.  The IOM appears on tax–haven lists and ranks 42 on the 2018 [[Finance:Financial Secrecy Index|Financial Secrecy Index]].<ref>{{cite web| url=https://www.financialsecrecyindex.com/introduction/fsi-2018-results| title=Financial Secrecy Index 2018| publisher=Tax Justice Network| date=2018| access-date=2 April 2018| archive-url=https://web.archive.org/web/20180331040220/https://www.financialsecrecyindex.com/introduction/fsi-2018-results| archive-date=31 March 2018| url-status=live}}</ref><ref>{{cite web| url=http://www.financialsecrecyindex.com/PDF/IsleofMan.pdf| title=Report on the Isle of Man| publisher=Tax Justice Network| date=2017| access-date=15 April 2018| archive-url=https://web.archive.org/web/20180415191128/http://www.financialsecrecyindex.com/PDF/IsleofMan.pdf| archive-date=15 April 2018| url-status=live}}</ref>

The Chief Minister of the IOM, Howard Quayle, announced that the CORPNET report proved that the IOM is not a tax haven.<ref>{{cite web | url=http://www.iomtoday.co.im/article.cfm?id=35167&headline=We%27re%20no%20tax%20haven%20study%20concludes&sectionIs=news&searchyear=2017 | title=We're no tax haven study concludes | publisher=IOM Today | date=1 August 2017 | access-date=15 April 2018 | archive-url=https://web.archive.org/web/20190427141235/http://www.iomtoday.co.im/article.cfm?id=35167&headline=We%27re%20no%20tax%20haven%20study%20concludes&sectionIs=news&searchyear=2017 | archive-date=27 April 2019 | url-status=live }}</ref><ref>{{cite web| url=https://business-reporter.co.uk/2017/11/07/isle-man-closely-mirrors-uk-rules-says-chief-minister/?getcat=2934| title=Isle of man 'closely mirrors' UK rules, says Chief Minister| work=The Daily Telegraph Business Reporter| date=7 November 2017| access-date=15 April 2018| archive-url=https://web.archive.org/web/20180415192910/https://business-reporter.co.uk/2017/11/07/isle-man-closely-mirrors-uk-rules-says-chief-minister/?getcat=2934| archive-date=15 April 2018| url-status=live}}</ref> However, CORPNET researchers from the University of Amsterdam directly replied to Howard Quayle's article<ref>{{cite web| url=https://corpnet.uva.nl/response-to-howard-quayle-chief-minister-of-isle-of-man/| title=Response to Howard Quayle, Chief Minister of Isle of Man| publisher=CORPNET| date=8 November 2017| access-date=15 April 2018| archive-url=https://web.archive.org/web/20180416012242/https://corpnet.uva.nl/response-to-howard-quayle-chief-minister-of-isle-of-man/| archive-date=16 April 2018| url-status=live}}</ref> clarifying that while the IOM does not appear as a leading sink OFC for corporate tax avoidance, it does not mean that individuals (personal bank accounts and trusts) do not use the IOM to avoid taxes, and particularly United Kingdom VAT.

Other commentators have added that the IOM is "failing as a tax haven", and is now too small to appear in major studies like the CORPNET research.<ref>{{cite web | url=http://www.taxresearch.org.uk/Blog/2017/08/02/the-isle-of-man-is-failing-at-being-a-tax-haven/ | title=The Isle of Man is failing at being a tax haven | publisher=Tax Research UK | date=2 August 2017 | author=Richard Murphy | access-date=27 April 2019 | quote=You could almost say that the Isle of Man did not feature in this new study [Conduit and Sinks] simply because it's not a very successful tax haven anymore. |  archive-url=https://web.archive.org/web/20180617165221/http://www.taxresearch.org.uk/Blog/2017/08/02/the-isle-of-man-is-failing-at-being-a-tax-haven/ | archive-date=17 June 2018 | url-status=live }}</ref>

== Ireland underestimated ==

The CORPNET report used legal corporate connections on the Orbis database, rather than the actual "quantum" of money, as its primary metric of analysis.  In theory, the authors felt that this does not impede the goal of classification, and of making relative rankings.  However, it does mean the "monetary amount" of potential tax avoidance was not calculated.<ref name="xx"/>

The tax haven academic and author of ''[[Finance:The Hidden Wealth of Nations|The Hidden Wealth of Nations]]'', [[Biography:Gabriel Zucman|Gabriel Zucman]], used a different quantitative approach.  Zucman focused on macro–data of national statistical accounts.  In theory, the total assets in a system should equal the total liabilities.  By aggregating national account data, Zucman identified an excess of liabilities over assets, implying that the missing assets (to balance the equation), are hidden in tax–havens.  On this basis, in 2015, he estimated that 8% of the world's wealth (or US$7.6 trillion) was "missing" in offshore tax–havens.<ref>{{cite news|url=https://www.nytimes.com/2014/06/16/opinion/a-piketty-proteges-theory-on-tax-havens.html|title=The True Cost of Hidden Money|newspaper=The New York Times|date=15 June 2014|author=Jacques Leslie|access-date=27 April 2019|archive-url=https://web.archive.org/web/20190416121413/https://www.nytimes.com/2014/06/16/opinion/a-piketty-proteges-theory-on-tax-havens.html|archive-date=16 April 2019|url-status=live}}</ref><ref name=Zucman>{{cite journal |author=Gabriel Zucman |title=Taxing across Borders: Tracking Personal Wealth and Corporate Profits |journal=[[Finance:Journal of Economic Perspectives|Journal of Economic Perspectives]]|volume=28 |issue=4 |pages=121–48 |doi= 10.1257/jep.28.4.121|date=August 2014|url=http://eprints.lse.ac.uk/66119/1/Zucman_Taxing%20across%20Borders.pdf |doi-access=free }}</ref>

Zucman's analysis highlighted the special case of Ireland and why the Orbis database underestimates Ireland's scale as one of the world's largest corporate tax avoidance, or [[Finance:Base erosion and profit shifting|BEPS]], hubs.<ref name="zucc">{{cite news | url=https://www.theguardian.com/commentisfree/2017/nov/08/tax-havens-dodging-theft-multinationals-avoiding-tax | title=The desperate inequality behind global tax dodging | newspaper=The Guardian | author=Gabriel Zucman | date=8 November 2017 | access-date=6 March 2019 | quote=The equivalent of 10% of global GDP is held offshore by rich individuals in the form of bank deposits, equities, bonds and mutual fund shares, most of the time in the name of faceless shell corporations, foundations and trusts. |  archive-url=https://web.archive.org/web/20190308142032/https://www.theguardian.com/commentisfree/2017/nov/08/tax-havens-dodging-theft-multinationals-avoiding-tax | archive-date=8 March 2019 | url-status=live }}</ref> In 2018, Zucman (''et alia'') showed that many of Ireland's U.S. multinationals don't appear on Orbis (e.g. Facebook), or only have a small fraction of their data on Orbis (e.g. Google and Apple).  Analysed using "quantum of funds" (not "Orbis connections"), Zucman showed Ireland is one of the largest corporate tax shelters in the world, and a route for Zucman's estimated loss of 20% in EU corporate tax revenues annually.<ref name="zuc">{{cite web|url=http://gabriel-zucman.eu/files/TWZ2018Slides.pdf|title=The Missing Profits of Nations|author=Gabriel Zucman|publisher=[[Organization:National Bureau of Economic Research|National Bureau of Economic Research]], Working Papers|date=April 2018|pages=11–15|access-date=27 April 2019|quote=Slide 11: Issues with previous literature on global profit shifting|author-link=Gabriel Zucman|archive-url=https://web.archive.org/web/20180612141342/http://gabriel-zucman.eu/files/TWZ2018Slides.pdf|archive-date=12 June 2018|url-status=live}}</ref><ref name="Irish Times">{{cite news|url=https://www.irishtimes.com/business/economy/ireland-is-the-world-s-biggest-corporate-tax-haven-say-academics-1.3528401?mode=sample&auth-failed=1&pw-origin=https%3A%2F%2Fwww.irishtimes.com%2Fbusiness%2Feconomy%2Fireland-is-the-world-s-biggest-corporate-tax-haven-say-academics-1.3528401|title=Ireland is the world's biggest corporate 'tax haven', say academics|quote=Study claims State shelters more multinational profits than the entire Caribbean|newspaper=The Irish Times|date=13 June 2018|author=Mark Paul|access-date=27 April 2019|archive-url=https://web.archive.org/web/20180824044322/https://www.irishtimes.com/business/economy/ireland-is-the-world-s-biggest-corporate-tax-haven-say-academics-1.3528401?mode=sample&auth-failed=1&pw-origin=https%3A%2F%2Fwww.irishtimes.com%2Fbusiness%2Feconomy%2Fireland-is-the-world-s-biggest-corporate-tax-haven-say-academics-1.3528401|archive-date=24 August 2018|url-status=live}}</ref><ref name="gabzucucwsj">{{cite news|url=https://www.wsj.com/articles/corporations-push-profits-into-tax-havens-as-countries-struggle-in-pursuit-study-says-1528634659|title=Zucman:Corporations Push Profits into Corporate Tax Havens as Countries Struggle in Pursuit, Gabrial Zucman Study Says|quote=The new research draws on data from countries such as Ireland, Luxembourg and the Netherlands that hadn't previously been collected.|newspaper={{wipe|The Wall Street Journal}}|date=10 June 2018|author=Richard Rubin|access-date=27 April 2019|archive-url=https://web.archive.org/web/20190404203053/https://www.wsj.com/articles/corporations-push-profits-into-tax-havens-as-countries-struggle-in-pursuit-study-says-1528634659|archive-date=4 April 2019|url-status=live}}</ref>

==See also==

* [[Finance:Corporate tax haven|Corporate tax haven]]
* [[Finance:Tax haven|Tax haven]]
* [[Finance:Offshore financial centre|Offshore financial centre]]
* [[Finance:Financial centre|Financial centre]]
* [[Finance:Base erosion and profit shifting|Base erosion and profit shifting]]
* [[Finance:Double Irish arrangement|Double Irish arrangement]]

==Notes==

{{notelist}}

==References==
{{Reflist}}

==External links==
* [http://corpnet.uva.nl/ University of Amsterdam CORPNET] 
* [http://www.jfichtner.net/visualizations-of-global-finance/ Jan Fichtner Offshore–Intensity Ratio]
* [http://gabriel-zucman.eu/ Gabrial Zucman, University College Berkley]
* [https://www.bvdinfo.com/en-gb/our-products/data/international/orbis Moody's ORBIS Database]
* [https://itep.org/ Institute on Taxation and Economic Policy]

{{Globalization}}

[[Category:International taxation]]
[[Category:Economic globalization]]
[[Category:International finance]]
[[Category:Offshore finance]]
[[Category:Tax avoidance]]
[[Category:Corporate tax avoidance]]
[[Category:Tax evasion]]

{{Sourceattribution|Conduit and sink OFCs}}