Tax haven countries prosper as the rest falter
According to a recent report by the United Nations, the campaign to prevent money-tapping companies through tax havens is unsuccessful, as offshore centers boost their foreign direct investment shares.
The annual report, named World Investment Report, said that dealing with offshore financial centers in itself is not the only way to address the issue.
Even as investments are failing in many markets, the British Virgin Islands economy is experiencing the flipside. The country's economy is enjoying a tremendous boost. The British Virgin Isles, with its population of only 30,000, is the fifth biggest recipient of foreign direct investments in the word, according to the report.
The archipelagic nation gained US$65 billion of inward investment flows last year, only a little less that fourth placer Brazil. "Tax haven economies now account for a non-negligible and increasing share of global FDI flows, at about 6 percent," said the think tank.
Economies in the European region, however, underwent a major slump. Belgium, which gaines US$103 billion in 2011, lost investments the following year. Other countries like the Netherlands and Germany suffered the same fate.
"Efforts since 2008 to reduce flows to OFCs (offshore financial centers) have coincided with record increases in retained earnings and cash holdings," said the report.