Tax havens: do they have a future providing banking and financial services?

This paper will attempt to provide an answer to the question: will tax havens continue to provide financial and banking services to non-resident investors in the face of sustained pressure from the Organisation for Economic Cooperation and Development (OECD)1 and the developed nations, in particular the G20? The question encompasses more than just the issue of whether or not tax havens and Offshore Financial Centres (OFCs) will continue to operate as financial centres attracting mobile capital from individuals and Multi-National Enterprises (MNEs) because they have low or no taxes. Two other important considerations which are fundamental to the future of tax havens are: first, whether these nations will amend their bank secrecy laws; and second whether tax havens and OFCs will enter into Tax Information Exchange Agreements (TIEAs) so that non-resident taxpayers and MNEs will be deterred from locating capital in those tax havens to minimise the impact of taxation in their home country.