Indeed, an Offshore Financial Center (OFC) is a low-tax jurisdiction specializing in the provision of business services and company formation to non-resident offshore companies and offshore capital investment opportunities . However, the exploitation of OFCs should not obscure the legitimate role of such centers in the global financial system for illegal purposes. Numerous jurisdictions transform into true financial centers that offer enormous benefits by enabling legitimate financial planning and risk management. Before lending to countries with underdeveloped corporate law, the extent of OFCs can be seen from the situation of the Overseas Private Investment Corporation (OPIC), a US government agency. OPIC needs a borrower to train an “offshore” intermediary for the financing of the concessional loan. Examples of real financial centers in Singapore and Hong Kong. This section argues that despite the presence of banking opacity, corporate structure and secrecy, these two jurisdictions can be distinguished from classic tax havens and their examples demonstrate that low-level tax competition is non-mandatory and “harmful”. Say no to plagiarism. Get a tailor-made essay on "Why Violent Video Games Shouldn't Be Banned"? Get an original essay Tax haven and OFCs are strongly related, a tax haven is a country that provides foreign individuals and businesses with minimal tax liability in a stable economic and political environment. More generally, through transfer pricing, the tax haven allows multinational enterprises (MNEs) to transfer profits from a high-tax jurisdiction to a low-tax jurisdiction. It is argued that most industrialized countries have similar tax havens, such as Guernsey with the United Kingdom, Gibraltar with Spain and Monaco with France. Despite limited resources, these islands are quite small for expansion into industrialized countries. Being a tax haven is a method of survival. Thus, Hong Kong and Singapore are chosen to expand their “offshore” sector. Their jurisdictions are following a historical path of development and have changed from commercial centers to financial centers, but for different reasons. Hong Kong is the gateway to China, while Singapore is strategically located in close proximity to Southeast Asia. The offshore financial center has offshore banking licenses. A multinational company establishes an offshore bank to carry out its foreign exchange operations or to facilitate the financing of a joint venture with an international company. In addition to this, an onshore bank establishes a wholly owned subsidiary in an OFC to offer offshore fund administration services such as transfer agent services, fund administration, fund accounting and fully integrated global custody. The owner of a regulated onshore bank has created a “parallel” sister bank in an offshore financial center. The attractiveness of the offshore financial center may contain less stringent trading restrictions and reporting requirements, light supervision and regulation, no exchange controls, no capital and capital gains taxes, no corporate taxes, no transfer taxes and no withholding taxes on dividends. or interest. For example, under the Labuan Financial Services and Securities Act 2010 (“LFSS”), offshore banking in Labuan can be implemented by offshore companies, Malaysian banks and branches of foreign offshore companies. The offshore financial center can help maintain privacy for personal, family, business or political reasons. In a,.