Offshore bound

In a speech before the G20 Leaders’ Summit in Brisbane this past November, President Xi Jinping made history by being the first Chinese president to speak out on issues of taxation on a high-profile, international stage. Among his four proposals to his fellow leaders was a motion in line with ongoing discussions on tax evasion and corruption in China and around the world. “Global tax cooperation,” Xi affirmed, “should be strengthened to combat international tax evasion and avoidance, and help emerging and low-income countries improve their tax administration capabilities.”

Xi’s call was well received. In the G20 Leaders’ Communiqué issued at the end of the summit, they reiterated their commitment to the Organization for Economic Co-operation and Development (OECD) Action Plan on Base Erosion and Profit Shifting (BEPS), and endorsed its common reporting standard. The leaders called for other financial centres to join them, including those of developing countries, pledging their assistance in building sound tax administration and automatic information exchange.

The tightened grip of international regulators has put increasing pressure on offshore jurisdictions, but their competitive edges lie not merely in attractive tax regimes. Offshore jurisdictions have been making considerable effort to build legal and regulatory systems that are sound and accessible, while at the same time leveraging their geographical advantages to attract foreign investors, including those from China.