The origin of offshore banking units can be traced to the growth of financial activity in tax havens. A “tax haven” is a place where non-residents can receive income or own assets without paying high taxes. Some such places are Bahamas, Bermuda, Hong Kong, the Netherlands, Panama and Switzerland.
Some features of these tax havens are:
- Low rate or complete absence of income tax on foreign investment and income.
- High degree of economical and political stability and a political system, which directly or indirectly encourages and fosters business activity at the center.
- Strict and well enforced rules of banking secrecy.