Taiwan ranks 8th in global financial secrecy. (Image from Max Pixel)
TAIPEI (Taiwan News) — On Tuesday the Tax Justice Network (TJN) published a list of nations ranked in terms of how opaque their financial practices are, “The Financial Secrecy Index,” and this year Taiwan debuts on the list’s top 10 at number 8.
Taiwan is a relatively new addition to the TJN’s Index, only first appearing in 2015, due to a lack of data. Offshore operations and political isolation create a fertile climate for financial secrecy, according to the TJN.
A comprehensive analysis of Taiwan’s financial situation was not able to be compiled until 2017 by researchers from the University of Amsterdam. They concluded:
“The prominence of Taiwan [on the Index] is driven by Taiwanese technological companies, which often own Chinese firms through Hong Kong (33%) and Caribbean Islands (20%), or own Hong Kong firms through Caribbean Islands (12%).”
The prevalence of Overseas Banking Units (OBU), offshore structures with little oversight and lots of secrecy used to house and move money, helped jumpstart Taiwan’s participation in overseas business operations in the early 1990s, according to TJN. OBUs continue to be used today in Taiwan at an increasing rate.
(Image from Narrative Report on Taiwan)
One purpose of the TJN’s list is to highlight the “truly systematic nature of the secrecy and offshore problem.” Their website includes further details on their proposed solutions for international tax reform.
The TJN estimates that US$21-32 trillion of the world's private wealth is situated in what they call secrecy jurisdictions, a term similar in meaning to tax havens.
The Index surveyed 112 countries total. Switzerland came in first due to their stringent banking secrecy laws and housing of the global market’s offshore financial services.
The United States jumped up in rank on the Index, from sixth in 2013 and third in 2015 to second place this year, according to CNA. TJN attributes their ascendance in rank to money laundering, corruption, and tax evasion.
(Image from Tax Justice Network)