Tax havens already located are those that house the largest amount of IED ghost in the world. Luxembourg and the Netherlands group almost half. With Hong Kong, British Virgin Islands, Bermuda, Singapore, Cayman Islands, Switzerland, Ireland and Mauritius make up more than 85 percent of all phantom investments on the planet: about 12.7 billion dollars.
The practice is encouraged by deliberate political strategies to attract more FDI with fiscal benefits. Regardless of being phantom transactions, they contribute to the local economy by acquiring tax, accounting and financial advisory services, as well as paying registration and incorporation fees.
So profitable is that simulation, that in tax havens in the Caribbean these services represent the majority of GDP, along with tourism.
Attempts to curb tax evasion, such as the initiative G20 Erosion base and profit exchange, as well as the automatic exchange of bank account information within the Common Reporting Standard, have served little to curb the progress of the Phantom FDI, which grew 30 percent in a decade, admits the authors of the IMF.
Last August the issue of intra-firm transactions in Latin America as the most opaque item of FDI was outlined by the Economic Commission for Latin America and the Caribbean.
The capital flow – which implies new investment – decreased 20 percent during 2018 and added 69 billion dollars, the reinvestment of profits grew 16 percent, with 61 billion, and advanced the loan between companies that belong 168 percent to the same transnational, with a balance of 52 billion dollars.