Offshore jurisdictions as a tool of minimization of tax burden

Abstract

The importance of offshore jurisdictions as a tool to minimize the tax burden is researched in the article. The main reasons for the emergence and development of offshore zones, which include money laundering, reducing tax pressure, protection and increase of assets, optimization of transaction costs, lack of bureaucracy and over-regulation, risk management are analyzed. Thus, the main purpose of the emergence and development of offshore jurisdictions is a certain disagreement between the state, which seeks to fully control the financial situation within national borders, and citizens who do not want to be controlled and give their profits in the form of taxes. Offshore jurisdictions are also a tool for shading the state's economy. It was found out that the use of offshore schemes has a negative impact on the state economy, in particular through tax evasion leads to reduced fiscal flows, deteriorating economic environment, negative macroeconomic consequences, including balance of payments distortion, withdrawal of capital, additional pressure on the exchange rate, deepening corruption schemes. It is established that one of the reasons for the popularity and spread of offshore is favorable conditions for investment and business development. Part of the capital withdrawn from the country is later returned in the form of foreign investment. Such investments in the modern economy are called «round-trip» investments. A number of measures have been proposed to combat the minimization and optimization of taxation and tax evasion, the use of offshore zones, in particular, the control of transfer pricing; providing conditions for coverage of real financial results by business entities; regulation of offshore jurisdictions at the legislative level, improvement and compliance with current tax legislation; control over intentional distortion or change of information on the tax base; exercising control over the conduct of export operations with the use of intermediaries, which are companies located in offshore zones; identification and liquidation of affiliated companies, branches, which are registered in offshore jurisdictions