Offshore financial centre

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An offshore financial centre (OFC) is defined as a "country or jurisdiction that provides financial services to nonresidents on a scale that is incommensurate with the size and the financing of its domestic economy." "Offshore" is not always literal since many Financial Stability Forum–IMF OFCs, such as Delaware, South Dakota, Singapore, Luxembourg and Hong Kong, are landlocked or located "onshore", but refers to the fact that the largest users of the OFC are non-residents, i.e. "offshore". The IMF lists OFCs as a third class of financial centre, with international financial centres (IFCs) and regional financial centres (RFCs). A single financial centre may belong to multiple financial centre classes (e.g. Singapore is an RFC and an OFC). The Caribbean, including the Cayman Islands, the British Virgin Islands and Bermuda, has several major OFCs, facilitating billions of dollars' worth of trade and investment globally. During April–June 2000, the Financial Stability Forum–International Monetary Fund produced the first list of 42–46 OFCs using a qualitative approach. In April 2007, the IMF made a revised quantitative-based list of 22 OFCs, and in June 2018, another revised quantitative-based list of eight major OFCs, who are responsible for 85% of OFC financial flows, which include Ireland, the Caribbean, Luxembourg, Singapore, Hong Kong and the Netherlands. The removal of foreign exchange and capital controls, the early driver for the creation and use of many OFCs in the 1960s and 1970s, saw taxation and/or regulatory regimes become the primary reasons for using OFCs from the 1980s on. Progress from 2000 onwards from IMF–OECD–FATF initiatives on common standards, regulatory compliance, and banking transparency, has significantly weakened the regulatory attraction of OFCs. Tax-neutral is a term that OFCs use to describe legal structures where the OFC does not levy any corporation taxes, duties or VAT on fund flows into, during, or...