Offshore financial centers: Safe or tax havens

Patrice Pieretti, Jacques Thisse and Skerdilajda Zanaj

DEM Discussion Paper Series from Department of Economics at the University of Luxembourg

Abstract: This paper explains why and how a small country can be an offshore financial center (OFC). We build a model involving a small and a large country competing for portfolio investments. They use two instruments, taxation and institutional infrastructure. We identify the conditions for an OFC to be a tax haven, a safe haven or both. The existence of a tax haven need not be as bad as claimed in the media because its presence fosters institutional competition which is beneficial to all investors,

Keywords: offshore financial centers; portfolio investments; institutional infrastructure competition; tax competition (search for similar items in EconPapers)
JEL-codes: G20 H40 H54 (search for similar items in EconPapers)
Date: 2013
New Economics Papers: this item is included in nep-acc, nep-pbe and nep-pub
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Citations: View citations in EconPapers (2)

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Persistent link: https://EconPapers.repec.org/RePEc:luc:wpaper:13-20

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