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Markus Meinzer ■ Where to draw the line? Identifying secrecy jurisdictions for applied research

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Tax justice reports
Tax justice reports

Where to draw the line? Identifying secrecy jurisdictions for applied research

This report provides a guide to organisations interested in using the Financial Secrecy Index for specific purposes e.g. mapping subsidiaries of MNCs or challenging development banks for their tax haven investment holdings. The paper reviews the known uses of Financial Secrecy Index 2009/"2011 and presents four alternative ways which are the fruit of discussions of the Tax Justice activists.

This report provides a guide to organisations interested in using the Financial Secrecy Index, first established in 20019, for specific purposes Such might be to map subsidiaries of MNCs or challenge development banks for their tax haven investment holdings.

The paper reviews the known uses of Financial Secrecy Index 2009/”2011 and presents four alternative ways which are the fruit of discussions of the Tax Justice activists.

It is clear that the available lists of tax havens published by the OECD and others are politically tainted and therefore cannot serve as a basis for objective analysis. In order to mitigate the benefits and risks we outline five different approaches to listing secrecy jurisdictions, each with their pros and cons.

There is no perfect answer to the question of where to draw the line for the purpose of identifying secrecy jurisdictions and/or tax havens based on FSI data. For policy making, there is a general tendency to point fingers at others, preferably small and politically poorly connected jurisdictions. Therefore, a great deal of caution is required in how to frame any listing of jurisdictions and close follow-up is required in order to avoid abuse of any listing. 

Key findings

  • The report proposes five different financial secrecy lists using the Financial Secrecy Index with a brief examination of pros and cons.
  • A degree of caution is required in setting the frame for any secrecy listing of jurisdictions.
  • The use of listings require close follow-up and monitoring in order to avoid abuse of any listing. 

Key recommendations

  • For research purposes a distinction should be made between research aiming at revealing multi-nationals tax motivated profit shifting on the one hand, or uncovering a broader range of illegal and illicit activity on the other.
  • The report proposes five different ways of arranging the secrecy scores using the Financial Secrecy Index with a brief examination of pros and cons.

Additional resources