draining development.pdf - Khazar University

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.