Tax havens grew in the so-called post-colonial, post-empire era. As nations claimed independence from colonial rule, ‘settlers’, colonial officials, and businesspeople left the colonial world requiring more sophisticated mechanisms for taking ‘their’ assets with them, and in some cases, they wanted to maintain their assets offshore and untaxed. This context was key to the embedding of offshore into the global economy.
In many ways, tax havens function as ‘second empires’ enabling the continuing extraction of wealth and tax revenues for the powerful. It has always been possible for wealthy people to take their wealth (or themselves) elsewhere to other jurisdictions, to escape the responsibilities of society at home, but tax havens and the nature of modern finance means the possibilities go far beyond what they could once physically carry or pay others to carry on their behalf. Today it seems to be limitless.
The founding of the Swiss Confederation in 1848 marked the birth of perhaps the first organised and identifiable tax haven – though bankers in Geneva and Zurich had harboured Europeans élite’s’ wealth in conditions of secrecy for years beforehand. Various pirate coves in the Caribbean, the English Channel and elsewhere also hosted what might be described as early offshore activity.
The era of financial globalisation from the 1960s onwards marked a new, more virulent phase of offshore activity, as staid and secretive Swiss-styled banking secrecy was complemented by more aggressive, hyperactive Anglo-Saxon strains that took off in the Caribbean and Britain’s nearby Crown Dependencies, alongside Luxembourg and other European havens.
The United States began deliberately putting into place secrecy facilities from the 1970s in particular. European jurisdictions such as Ireland and the Netherlands began to get in the game. Asian havens, notably Hong Kong and Singapore, also have long histories as centres for often illicit offshore finance, and are the fastest-growing segment of the offshore game today.
To read more about the history of tax havens, we would highlight a few resources.
Nicholas Shaxson’s 2011 book Treasure Islands is the most widely referenced book on the subject. For a shorter summary of some of the historical points, see his article in Vanity Fair, A Tale of Two Londons.)