A Study Of The UBO Transparency System Of OFCs

Offshore financial centers(OFCs)have always been known for their high level of confidentiality and low tax rates.Enterprises or individuals in many countries around the world prefer to set up companies in OFCs through tax planning to avoid taxing,or use OFCs and the confidentiality of offshore company to conduct financial crimes such as money laundering.Then how can OFCs develop towards real OFCs? The core element is to raise the level of transparency of OFCs.In order to raise the level of transparency,OFCs have joined FATF and CRS.Some of OFCs,like the British Virgin Islands and the Cayman Islands,passed their own economic substantive laws and public registration system act as well.The core theory of this system is penetrating supervision,identifying the natural person who benefit ultimately—the ultimate beneficial owner.Under this regime,the ultimate beneficial owners' identities,assets and tax resident status will be open to the supervisory organs,giving them opportunities to supervise the business activities in OFCs.Under the transparent system of the actual beneficiaries of offshore centers,the confidentiality of offshore companies has been shaken passively,and financial criminals hiding behind offshore companies have lost their protective barriers,providing retrospection and inquiries to regulatory authorities and law enforcement agencies in various countries.This system also has certain effects on the supervision of offshore company activities.For example,the use of offshore companies for money laundering,tax avoidance,and return investment has been restricted.But the system adopted by offshore centers is not perfect,and there are still some shortcomings.The system of transparency of UBO in offshore centers and the trend of transparency of UBO in the world have brought opportunities and challenges to our country.This system is conducive to China's regulation of transnational tax avoidance and offshore money laundering.This system itself was established on the base of developed countries with perfect financial systems,but China's financial system is imperfect,and introducing this system must encounter various problems that need to be resolved through legislation.This article is divided into three parts,introduction,text and conclusion.There are four chapters in the text.The first chapter is the background of the UBO transparency system and the reason to implement this system.This chapter briefly introduces the high level of confidentiality of OFCs and offshore companies,and explains that is the main reason for why offshore companies are often used as tax avoidance and money laundering tools,and clarify the concepts and identification standards of actual beneficiaries,then introduce the main question—how to increase the transparency of OFCs.The second chapter is UBO transparency system.In this chapter,the author first introduces the theoretical basis behind the UBO transparent system—penetrating supervision theory.Then through the development process of the UBO transparency system,explore the measures included in the UBO transparency system and the relationship between the measures.Then use British Virgin Islands as an example to introduce the system and how this system can be integrated.The third chapter is about the problems in the UBO transparent system.This chapter first introduces the regulatory effects of the UBO transparency system of offshore financial centers,and then analyzes the problems in the system of offshore financial centers,and then analyzes under the disadvantages of the system,whether the UBO transparency system can achieve the intended purpose,and finally evaluate this system.The fourth chapter is about the opportunities and challenges that the UBO transparency system of offshore financial centers brings to China,and how to face these opportunities and challenges by improving laws and regulations,then come up with suggestions in regard with the challenges.