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298 Draining Development?Table 9.5. Secrecy Jurisdiction Locations of Multinational CorporationSubsidiariesnumberRank Secrecy jurisdiction MNC subsidiaries1 Cayman Islands 1,1302 Ireland 9203 Luxembourg 8244 Switzerland 7715 Hong Kong SAR, China 7376 Singapore 6617 Bermuda 4838 Jersey 4149 Hungary 25210 British Virgin Islands 24411 Malaysia (Labuan) 17712 Mauritius 16913 Bahamas, The 15614 Guernsey 15115 Philippines 12616 Panama 12517 Isle of Man 9918 Costa Rica 8519 Cyprus 6920 Netherlands Antilles 6821 Uruguay 6722 Malta 6023 United Arab Emirates (Dubai) 5824 Israel 5625 Gibraltar 5426 Barbados 5127 Latvia 4028 U.S. Virgin Islands 3729 Monaco 3530 Liechtenstein 32Source: Mapping Financial Secrecy (database), Tax Justice Network, London, http://www.secrecyjurisdictions.com/index.php (accessed December 12, 2009).
Accounting for the Missing Billions 299The situation was worse for the beneficial (as opposed to nominal)ownership information on public record. Only Monaco requires thatthese data be available. In all other cases, nominee ownership may berecorded, or there is simply no requirement to record data on publicrecord at all. 28It is readily apparent, as a consequence, that, unless data are requiredfrom MNCs on the companies making up or not making up their groupand the operations of each, as shown by the audited accounts, then thecurrent legal requirements for data registration within secrecy jurisdictionsensure that the information required to assist in the appraisal ofMNC activities, including those relating to transfer mispricing, will simplybe unavailable to most people and, quite possibly, to many taxauthorities if that is the MNC’s wish, as it will be if the MNC is seekingto hide transfer mispricing activity.This would not be an issue if MNCs did not use secrecy jurisdictions.The reality is that they do use secrecy jurisdictions extensively. Of theEuropean and U.S. samples, 97.2 and 84.0 percent, respectively, hadsecrecy jurisdiction subsidiaries as defined by the TJN. Table 9.5 indicatesthe number of subsidiaries by location according to the TJN survey.(Data on the 24 additional, smaller jurisdictions have been ignored;these jurisdictions are immaterial for the purposes of this chapter.)It is readily apparent that some locations stand out, but the data makea lot more sense if they are plotted against two control variables: populationand GDP (figure 9.4).The data in figure 9.4 are ranked by the number of subsidiaries byGDP in billions of U.S. dollars. In most cases, the correlation with aranking by the number of subsidiaries per head of population is clear.These weighted data give a much better view of the relative importanceof these secrecy locations. It is apparent that some show extraordinaryamounts of activity relative to their size. There is only one explanationfor this: the secrecy jurisdictions are not creating entities for use by thelocal population, but, as the definition of these jurisdictions in this chaptersuggests is likely, for the use of people resident elsewhere. The companiesthat are registered in these jurisdictions do little or nothing inthese locations.
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Public Disclosure AuthorizedPublic
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DRAININGDEVELOPMENT?Controlling Flo
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ContentsForewordAcknowledgmentsCont
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Contents vii15. Policy and Research
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ForewordThe subject of Draining Dev
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AcknowledgmentsThis project was ini
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ContributorsMarcela Anzola is a leg
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AbbreviationsAFDIALPAMLATMBLSBNPCBN
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1Introduction and Overview:The Dyna
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Introduction and Overview: The Dyna
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Part IThe Political Economyof Illic
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22 Draining Developmentvital to hav
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24 Draining Developmentinstitutiona
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26 Draining Developmentdemanding wa
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28 Draining Developmentthe early 19
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30 Draining Developmentthe primary
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32 Draining Developmentsomewhere el
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34 Draining Developmentonly of unre
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36 Draining Development2. The socia
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38 Draining Developmentdeveloping c
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40 Draining Development8.5 times, m
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42 Draining DevelopmentTo understan
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44 Draining Developmentcaptured by
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46 Draining Developmentlead to a li
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48 Draining Developmentis turned, m
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50 Draining Developmentprofitabilit
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52 Draining Developmentpromote grow
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54 Draining DevelopmentLatin Americ
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56 Draining DevelopmentWe should no
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58 Draining DevelopmentTable 2.2. I
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60 Draining Developmentpolicies in
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62 Draining Developmentattempt to r
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64 Draining DevelopmentMalawi is no
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66 Draining DevelopmentGlobal Witne
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68 Draining Development———. 2
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70 Draining Developmentillicit capi
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72 Draining Developmentgovernance i
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74 Draining Developmentpopular Russ
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76 Draining Developmentthe rent see
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78 Draining Developmenthorizons tha
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80 Draining Development(compared wi
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82 Draining Developmentproviding be
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84 Draining Developmentessential to
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86 Draining Developmentfrom the gen
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88 Draining DevelopmentControlling
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90 Draining Developmentincome ones,
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92 Draining Developmentmutual oblig
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94 Draining Developmentincentives a
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96 Draining Developmentcoverage), (
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98 Draining Development40. The Nati
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100 Draining DevelopmentDFID (U.K.
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102 Draining DevelopmentHayoz, N.,
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104 Draining DevelopmentPolicy. Hel
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106 Draining DevelopmentThies, C. 2
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4Tax Evasion and Tax Avoidance:The
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Tax Evasion and Tax Avoidance: The
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5Illicit Capital Flows and MoneyLau
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Illicit Capital Flows and Money Lau
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6Human Trafficking andInternational
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Human Trafficking and International
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Part IIITo What Extent DoCorporatio
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206 Draining Development?Introducti
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208 Draining Development?1979). The
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210 Draining Development?Why Engage
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212 Draining Development?Transfer P
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214 Draining Development?• If exp
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216 Draining Development?Income shi
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218 Draining Development?such studi
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220 Draining Development?between re
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222 Draining Development?transactio
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224 Draining Development?Some resea
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226 Draining Development?(mostly by
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228 Draining Development?the abilit
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230 Draining Development?———.
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232 Draining Development?———.
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8The Role of Transfer Pricing inIll
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The Role of Transfer Pricing in Ill
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Tax Havens and Illicit Flows 349(se
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Tax Havens and Illicit Flows 351Not
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Tax Havens and Illicit Flows 353sio
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Tax Havens and Illicit Flows 355mis
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Tax Havens and Illicit Flows 357tai
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Tax Havens and Illicit Flows 3593.
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Tax Havens and Illicit Flows 361usu
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Tax Havens and Illicit Flows 363Fig
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Tax Havens and Illicit Flows 365the
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Tax Havens and Illicit Flows 3675.
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Tax Havens and Illicit Flows 369—
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Tax Havens and Illicit Flows 371Tor
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374 Draining Development?to be any
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376 Draining Development?either by
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378 Draining Development?driving up
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380 Draining Development?unemployme
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382 Draining Development?Wrong 2000
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384 Draining Development?countries.
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386 Draining Development?held. 19 W
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388 Draining Development?Situationa
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390 Draining Development?from Cayma
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392 Draining Development?has been r
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394 Draining Development?Case 2. Up
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396 Draining Development?majority.
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398 Draining Development?conceptual
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400 Draining Development?Member cou
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402 Draining Development?Box 12.1 A
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404 Draining Development?this level
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406 Draining Development?set agains
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408 Draining Development?2. A paral
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410 Draining Development?• By cor
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412 Draining Development?Auld, R. 2
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13The Kleptocrat’s Portfolio Deci
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The Kleptocrat’s Portfolio Decisi
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14The Practical Political Economyof
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The Practical Political Economy of
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15Policy and Research Implicationso
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Policy and Research Implications of
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IndexBoxes, figures, notes, and tab
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Index 509in developing countries, 2
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Index 511ChinaAML controls and, 401
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Index 513Ethiopia, and tax havens,
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Index 515government territorial con
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Index 517Indiadistortionary governm
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Index 519Kudrle, R., 340-41, 345Kuw
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Index 521informal economy, 145, 150
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Index 523Paraguayhuman trafficking
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Index 525SSalinas, Paulina, 394Sali
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Index 527political economy model of
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Index 529Trocca, 394Truman, E. M.,
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Index 531Willmott, H., 207windfall
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AGROWING CONCERN AMONG THOSE INTERE
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