Tax havens. China's multi-faceted connection with offshore jurisdictions.

Abstract

What is a tax haven? Why are tax havens relevant in today's global economy, and why there is an intense capital flow between China and the Caribbean? The purpose of my thesis is to analyze the motivations which led to the rise of the phenomenon of tax havens in today's global market, and to understand why offshore locations played an increasingly relevant role in the flow of capital across the borders; then, my thesis aims to investigate why and how is China involved in this phenomenon. In the first part, the phenomenon of tax havens is analyzed for its relevance on a global level, with examination of the motivations, the legal structures and the strategies adopted by both individuals and corporations for the purpose of channeling or hiding wealth offshore. In the second part, my thesis debates in detail the situation of China; in particular, I analyze the peculiarities of the use that Chinese investors make of tax havens, and investigate the causes and the implications of Chinese investment offshore. Further into detail, I analyze the specific relationship that China has with two Caribbean tax havens in particular, Cayman Islands and British Virgin Islands, and I also take into consideration the role of Hong Kong as a hub for Chinese investment and as important player in this triangulation. It is also illustrated the magnitude of the phenomenon providing figures of FDI inflows and outflows between these locations.