Against the idea of OFCs as exotic small islands that cannot be regulated, we show that many sink and conduit-OFCs are highly developed countries. Each conduit jurisdiction is specialized in a geographical area and there is significant specialization based on industrial sectors. In addition, a small set of five countries – the Netherlands, the United Kingdom, Ireland, Singapore and Switzerland – canalize the majority of corporate offshore investment as conduit-OFCs. Sink-OFCs attract and retain foreign capital while conduit-OFCs are attractive intermediate destinations in the routing of international investments and enable the transfer of capital without taxation. This granular firm-level network data uniquely allows identifying both sink-OFCs and conduit-OFCs. We introduce a novel data-driven approach for identifying OFCs based on the global corporate ownership network, in which over 98 million firms (nodes) are connected through 71 million ownership relations. Therefore, the identification of OFC jurisdictions has become a politicized and contested issue. Offshore Financial Centers (OFCs) facilitate these structures through low taxation and lenient regulation, but are increasingly under scrutiny, for instance for enabling tax avoidance. Multinational corporations use highly complex structures of parents and subsidiaries to organize their operations and ownership.
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