Secrecy Jurisdictions

‘Undertakings for Collective Investment in Transferable Securities' (pronounced yoo-sits) are collective investment schemes subject to a set of European Union directives that are intended to allow them to operate freely throughout the EU on the basis of a single authorisation from one member state. Collective investment schemes include investment funds and trusts, unit trusts, many insurance based products,[remove this comma?] including mutual funds and more besides. Such funds are intended to be invested in risk bearing securities, and should not therefore pay a return akin to interest. It is up to the fund to apply for UCITS status. The issue has tax significance in the context of the European Union Savings Tax Directive.

The United Nations Convention against Corruption was adopted on 14 December, 2005. Currently 131 states are parties to it. The convention requires its member states to adopt and follow a set of general guidelines and preventive measures as well as more detailed legislative action. In particular member states must criminalise the bribing of both national and foreign officials and to return funds obtained by corruption to the states from which they were stolen.

The United Nations Convention against Transnational Organized Crime, adopted by General Assembly resolution 55/25 of 15 November 2000, is the main international instrument in the fight against transnational organized crime. See http://www.unodc.org/unodc/en/treaties/CTOC/index.html

The 1988 United Nations Convention Against Illicit Traffic in Narcotic Drugs and Psychotropic Substances is one of three major drug control treaties currently in force. It provides additional legal mechanisms for enforcing the 1961 Single Convention on Narcotic Drugs and the 1971 Convention on Psychotropic Substances. The Convention entered into force on November 11, 1990. As of January 1, 2005, there were 170 Parties to the Convention.

International Convention for the Suppression of the Financing of Terrorism, adopted by the General Assembly of the United Nations on 9 December 1999. See http://untreaty.un.org/English/Terrorism/Conv12.pdf

Treats the income of related entities within a single firm or corporate group on a combined or consolidated basis, and applies a formula to apportion it for taxation to the different countries or territories from which it derives. Each jurisdiction involved may then apply the rate of tax it wishes. An alternative to the residence and source bases of taxation. It has been used in federal countries such as the USA, applying an allocation formula based on a ratio of sales, employment costs and assets employed within each state. It has been opposed by tax authorities (and TNCs) because they consider that it would be too difficult to reach international agreement, especially on the formula. However, taxation of highly integrated TNCs may in practice entail a formula-based allocation of profits, due to the difficulty of finding appropriate arm’s length transfer prices.

An entity incorporated in the same way as a limited liability company or corporation except that the members have unlimited liability for the debts of the company. Rarely found, they exist in some Anglo Saxon law jurisdictions where they have been little used. However, in exchange for unlimited liability they offer in locations such as the UK and Ireland the chance to have the status of being a separate legal entity taxable in its own right but without having obligation to place accounts on public record. This has been exploited by some corporations with major subsidiaries in Ireland to avoid details of their tax avoiding activities in that state from being disclosed.

An entity created within a secrecy jurisdiction intended for use in the unregulated market that operates in the secrecy space. This entity will not be accountable for its transactions either because that has been engineered to be the case, in which case it is operating nowhere, or because there is deliberate omission to make that declaration in a place elsewhere to that in which it is legally located, which place elsewhere is unaware of the unregulated entity’s obligation to make that declaration because of the existence of the secrecy space.

An alternative term for ‘offshore’. It is the sum of the commercial operations created to exploit the secrecy spaces created by secrecy jurisdictions. Unregulated entities trade within the unregulated market, either with other unregulated entities or with regulated entities.

The INCSR is the United States Government's country-by-country two volume report that describes the efforts to attack all aspects of the international drug trade, chemical control, money laundering and financial crimes.It is available at http://www.state.gov/p/inl/rls/nrcrpt/