1.1 Offshore Finance in a Colonial Perspective

Offshore finance has been the subject of extensive scholarly debate, particularly regarding its definition, dimensions, and global impact. While a comprehensive review of this body of work is beyond the scope of this Element, as noted earlier, it is important to foreground a central tension: Colonialism remains a hyper-present yet highly symbolic and often underexplored dimension of offshore finance. Whereas existing studies tend to treat colonialism as a historically constitutive precondition for the emergence of offshore finance, this Element instead centers colonialism as immanent structuring force of the offshore world. Accordingly, the following discussion of offshore finance, sovereignty, corporate power, and the state’s involvement in international tax law is framed through the lens of colonial continuity.

Offshore finance refers to financial strategies that relocate assets and liabilities outside an individual’s or a corporation’s home jurisdiction to exploit favorable regulatory environments (Palan Reference Palan2003; Palan et al. Reference Palan, Murphy and Chavagneux2010). Multinational enterprises (MNEs) and wealthy individuals engage in different processes of tax planning and regulatory arbitrage, shifting income and value-creating assets into jurisdictions with lower tax rates and lighter oversight. The jurisdictions that facilitate these transactions, catering primarily to nonresident users, are commonly known as tax havens, OFCs, secrecy jurisdictions, flag-of-convenience registries, free trade zones, or regulatory havens (Atiles and Whyte Reference Atiles and Whyte2025; Rixen Reference Rixen2011; Sharman Reference Sharman2010; Stausholm and Garcia-Bernando Reference Stausholm and Garcia-Bernardo2024). Many OFCs combine several of these functions within a single jurisdiction (Ogle Reference Ogle2017).

OFCs facilitate corporate tax planning, trade financing, alternative investments, domiciliation of corporations and shell companies, hedge funds and private equity and insurance companies, and more complex financial instruments (Palan et al. Reference Palan, Murphy and Chavagneux2010) by offering mechanisms for risk mitigation, 24-hour capital movement, and foreign exchange optimization (Maurer Reference Maurer2008). By allowing MNEs and high-net-worth individuals to manage income streams across jurisdictions, OFCs minimize exposure to “double taxation”Footnote ⁷ and support asset protection strategies (Palan et al. Reference Palan, Murphy and Chavagneux2010). These legal spaces are designed to attract mobile capital through permissive tax regimes, flexible incorporation regimes, trusts and secrecy laws, nonresidency tax incentives, and minimal enforcement mechanisms that shield assets from scrutiny (Palan et al. Reference Palan, Murphy and Chavagneux2010; Hampton Reference Hampton1996; Harrington Reference Harrington2016, Reference 87Harrington2024). Some OFCs specialize in services such as trust registration, international banking, captive insurance, cryptoassets, and the creation of special-purpose entities (SPEs) and vehicles (SPVs) (Aalbers Reference Aalbers2018). Others operate as regulatory havens, allowing corporations to bypass labor, environmental, and consumer protections (Atiles and Whyte Reference Atiles and Whyte2025). Similarly, Urry (Reference Urry2014) and Bracking (Reference Bracking2012) emphasize the centrality of offshore in private equity markets and its disruptive impact on transparency and governance.

For many scholars, secrecy remains the organizing principle of offshore finance (Chang, Harrington, and Rockmore Reference Chang, Harrington and Rockmore2025). Sharman (Reference Sharman2010) explains that OFCs employ the strategic use of calculated ambiguity, a legal structure that enables individuals and corporations to enjoy the benefits of ownership without its liabilities, borrow without assuming debt, report high profits while declaring none for tax purposes, and repackage domestic capital as foreign investment through “round-tripping” strategies. While Harrington (Reference 87Harrington2024:40) argues that “offshore finance survives and thrives based on a logic of predation rather than capitalism.” The system, Harrington (Reference 87Harrington2024) argues, is optimized for gaming the laws of other countries and for hoarding capital, rather than for putting capital to productive use. Diversification, malleability, and opacity are central to the operability of OFCs.

Common Law’s malleability, emphasis on judicial discretion, and its widespread recognition across former and current British and US colonies have made it central to the legal constitution of OFCs (Harrington Reference Harrington2016, Reference 87Harrington2024; Pistor Reference Pistor2019). That is, the colonial transfer of Common Law and the resulting global dominance of English and US legal systems in private and commercial law are central to the structuring of the offshore world, creating transnational legal relations that support the global circulation of capital.

Beyond legal design, OFCs are integral to the mechanics of wholesale finance, serving as booking centers for currency trades, equity deals, derivatives, and cryptoassets (Aalbers Reference Aalbers2018; Garcia-Bernardo et al. Reference Garcia-Bernardo, Fichtner, Takes and Heemskerk2017). These assets exist primarily as digital records or contracts, stored electronically and easily transferred across borders, providing a level of mobility and flexibility unmatched by other industries (Palan et al. Reference Palan, Murphy and Chavagneux2010). This global circulation of intangible assets requires a correspondingly global legal infrastructure. For instance, a financial transaction may be arranged in London or New York, centers where specialized legal expertise and tax advisers are concentrated (Christensen Reference Christensen2021; Christensen, Seabrooke, and Wigan Reference Christensen, Seabrooke and Wigan2020; Harrington Reference Harrington2016, Reference 87Harrington2024; Stausholm and Garcia-Bernardo Reference Stausholm and Garcia-Bernardo2024), but to circumvent British or US tax laws and financial and corporate regulations, the transaction can be legally registered or booked in an OFC’s jurisdiction such as the Cayman Islands, British Virgin Islands (BVI), or Bermuda (Moon Reference Moon2019; Palan Reference Palan2003; Roberts Reference Roberts, Corbridge, Martin and Thrift1994, Reference Roberts1995; Sybblis Reference Sybblis2023, Reference Sybblis2024). These jurisdictions are final destinations for value booking and asset ownership (Garcia-Bernardo et al. Reference Garcia-Bernardo, Fichtner, Takes and Heemskerk2017; Stausholm and Garcia-Bernardo Reference Stausholm and Garcia-Bernardo2024).Footnote ⁸ As shown in Chapter 3, in these jurisdictions, most banking and corporate entities exist only as shell operations. That is, branches that are legally registered but have no business activity or assets in the jurisdiction where they are domiciled (Palan et al. Reference Palan, Murphy and Chavagneux2010).

The global legal infrastructure of OFCs has historically developed around three central poles (Palan et al. Reference Palan, Murphy and Chavagneux2010).Footnote ⁹ The first is centered around the City of London and includes British Crown Dependencies (e.g., Jersey, Guernsey, and the Isle of Man); British Overseas Territories (BOTs) (e.g., Bermuda, BVI, Cayman Islands, Montserrat, and Turks and Caicos);Footnote ¹⁰ and former British colonies such as Hong Kong, Singapore, the Bahamas, Bahrain and Dubai; and islands and archipelagoes in the Pacific.Footnote ¹¹ The second is the European pole, including Andorra, Ireland, Liechtenstein, Luxembourg, Monaco, the Netherlands, and Switzerland. The third is the US pole, encompassing states such as Delaware, Nevada, and South Dakota, as well as unincorporated territories such as PR, the US Virgin Islands, Guam, American Samoa, and the Northern Mariana Islands.Footnote ¹² Harrington (Reference 87Harrington2024) notes that if the US is counted as a former British colony, over 80% of offshore finance is hosted in former or current Anglo-American jurisdictions. Thus, the offshore system operates within the legal–financial infrastructure forged during the imperial era (Harrington Reference 87Harrington2024), and its historical development shows how the global North both enables and selectively polices these OFCs, producing the regulatory asymmetries at the core of the offshore world.

Within this global legal infrastructure, the Caribbean stands out for its dense concentration of OFCs and its manufactured image as a paradise. Scholars suggest that, faced with structural constraints, including limited natural resources and industrial capacity, many Caribbean territories adopted offshore finance as a development strategy (Hakelberg et al. Reference Hakelberg, Ahrens and Crasnic2026; Ogle Reference Ogle2017, Reference Ogle2020; Palan Reference Palan2003; Palan et al. Reference Palan, Murphy and Chavagneux2010; Rivera-Quiñones Reference Rivera-Quiñones2025; Shaxson Reference Shaxson2011; Sybblis Reference Sybblis2024; Vlcek Reference Vlcek and Randall2019). Accordingly, positioned as peripheral yet strategically adjacent to North America, Caribbean territories function as vacation destinations and platforms for financial and corporate operations. The region’s reliance on tourism, financial services, and offshore finance reflects a broader pattern of economic dependency shaped by prolonged imperial relations (Roberts Reference Roberts, Corbridge, Martin and Thrift1994; Sheller Reference Sheller2003, Reference Sheller2020).Footnote ¹³

As discussed earlier, colonialism is the structure sustaining the Caribbean’s transformation into a hub for offshore finance. In line with scholarship that places the Caribbean at the center of modernity and global capitalism (Césaire Reference Césaire2001; Dussel Reference Dussel2013; Williams Reference Williams2021), this Element contends that the region is central to the structures of financial capitalism, shaped by centuries of extraction, legal plunder, and racialized dispossession. Hence, to understand how these legal spaces operate, we must move beyond notions of regulatory failure and toward an analysis of exceptionality (Bracking Reference Bracking2012; Cotula Reference Cotula2017).

1.2 Colonial State of Exception as the Legal Structure of the Offshore World

The offshore world occupies a paradoxical position within international law and global political economy. Many of the jurisdictions that serve as OFCs are listed by the United Nations as Non-Self-Governing Territories,Footnote ¹⁴ places that, by definition, have not achieved full political self-determination. These territories are often denied formal representation in international institutions and remain under the control of colonial powers through varying degrees of legal subordination and sovereign authority. Despite the continued lack of international legal recognition and decolonization, these jurisdictions remain hyper-integrated into the global financial circuits. This structural contradiction, being politically excluded while financially indispensable, is foundational to the operation of the colonial offshore economy.

Therefore, OFCs operate within a legal-spatial exceptionality, simultaneously existing both within and outside the regulatory frameworks of sovereign states. OFCs are imagined as elsewhere, zones of exception that facilitate financial practices disallowed or heavily restricted onshore. Yet, as Tait (Reference Tait2023) argues, the offshore must be conceptualized not as an isolated geography but as a relational space, defined by its functional integration with metropolitan centers of legal, economic, and political power. Offshore is a legal formation that enables jurisdictional arbitrage (Potts Reference Potts2019), serving as both barrier and bridge: a means to facilitate capital mobility while preserving regulatory segmentation (Tait Reference Tait2023). Offshore geographies are imperial geographies, historically and functionally shaped by colonial sovereignty and its logics of inclusive exclusion.

Sovereignty is central to the operability of offshore finance (Palan Reference Palan2003; Sharman Reference Sharman2006; Vleck Reference Vlcek2008). However, offshore finance scholarship often fails to adequately address the complexities of sovereignty in colonial contexts, where sovereignty resides primarily in the colonial powers. The complex interplay of sovereignty, self-government, and legal practices within these jurisdictions has deep roots in colonial governance structures. Ogle (Reference Ogle2017) argues that sovereignty under colonial rule was frequently attenuated, multiplied, and layered, resulting in delegated and fragmented authority. Local administrations in colonial territories wielded significant autonomy in crafting corporate, banking, and tax laws, an unevenness that historically enabled tax avoidance practices and contributed substantially to global capital accumulation (Ogle Reference Ogle2017).

In conversation with scholarship on sovereignty, colonial legality, and my previous research, I apply the concept of the colonial state of exception to analyze the legal design of offshore finance in the Caribbean. Drawing on Agamben’s (Reference Agamben2005) understanding of the state of exception, I argue that the defining paradox of sovereignty – to stand outside the law while simultaneously determining its applicability – offers a useful, though incomplete, lens for understanding the legal logics of colonialism and its constitutive dynamics in the Caribbean. For Agamben (Reference Agamben2005), the state of exception represents a space of anomie where law and politics blur, and sovereign power is exercised through the suspension of legal norms. Agamben (Reference Agamben2005) argues that the state of exception has become normalized in Western liberal democracies, moving from its use to address periods of emergency or crisis to its institutionalization in the post-9/11 security state.

Contrary to liberal democracies in the global North, the state of exception has always been the norm in the colonies (Mbembe Reference Mbembe2003; Reynolds Reference Reynolds2017). That is, in colonial contexts, the state of exception is the structure of governance (Atiles Reference Atiles2024; Reynolds Reference Reynolds2017). As Mbembe (Reference Mbembe2003) asserts, the colony is the original space of anomie, where sovereignty operates as the power to decide who lives and who dies, a mode of governance he terms necropolitics. The colonial state of exception, in this sense, is not an episodic tool of crisis management but a constitutive dimension of colonial rule. It operates as the structure through which a colonial government defines the colonial legal and sociopolitical reality, decides which laws apply to the colonial territory, and imposes differential legal procedures for colonial subjects. The colonial state of exception enables a hyper-mobile and malleable constitutional arrangement, which includes and excludes territories and subjectivities as the sovereign sees fit.

This form of legality captures colonial life in a suspended condition: always legal, but never fully protected by law. That is, the colonial state of exception produces colonial subjects who are not entirely excluded from the sphere of law but are instead enveloped in a suffocating hold by legality (Atiles Reference Atiles2024). This condition is best understood through the logic of inclusive exclusion, a definitional logic of the colonial state of exception. Inclusive exclusion names the legal-political process through which colonial subjects and territories are brought into the sphere of law through their subordination and differentiation. In PR and other Caribbean territories, inclusion within legal, economic, and territorial regimes is made possible through exclusions that define the limits of citizenship, sovereignty, taxation, and legality itself. This process of inclusive exclusion is made possible through racialized legal frameworks (Rivera-Quiñoes Reference Rivera-Quiñones2025). As a result of such colonial and racial categories, colonial jurisdictions and subjects are neither fully inside nor fully outside the legal order; they inhabit a space of exception in which the colonial sovereign decides which laws, regulations, and constitutional provisions apply to them.

This logic of inclusive exclusion mirrors the very structure of the offshore: just as the onshore requires the offshore to shield and divert capital, so too does liberal legality require racialized spaces of exception to sustain its order (Reynolds Reference Reynolds2017). The unincorporated status of PR and other US colonial territories exemplifies this dynamic, in which a legal structure of extraterritoriality and constitutional differentiation allows US investors, corporations, and wealthy individuals to benefit from sovereign protections while circumventing federal oversight. As Dick (Reference Dick2015) has shown, US imperial tax policy in PR implemented a series of legal reforms and exemptions designed to attract corporate capital while deepening colonial dependency. This Element builds on that analysis by arguing that the colonial state of exception configures PR and other Caribbean territories as offshore jurisdictions for tax avoidance, evading environmental regulations, labor protections, financial accountability, and democratic oversight, while rendering populations precarious, territories disposable, and ecologies vulnerable.

Faced with the logic of inclusive exclusion, local governments and elites have sought to align their economies with specific sectors of the global economy (Rivera-Quiñones Reference Rivera-Quiñones2025). From agriculture, heavy pollutant industries, and military bases to tourism and financial services, these local actors have pursued economic development through strategic accommodation within the colonial state of exception. Unlike scholarship that describes the use of small islands’ sovereignty by transnational corporations as a form of commercialization of sovereignty (Palan Reference Palan2003), this Element argues that the legal and political economic structures imposed by the colonial state of exception have propelled these jurisdictions to establish legal regimes that serve global capital, with the expectation that they might capture a fraction of the capital passing through their territories. This is a manifestation of what I have elsewhere called colonial legality (Atiles Reference Atiles2024), the use of the limited autonomy of the colonial government to engage in strategic accommodation to maintain existing hegemonic and class structures within the colonial state of exception.

1.3 The Corporate Citizen as the Privileged Subject of the Offshore World

In tandem with the configuration of the offshore world through the logic of inclusive exclusion, exceptionality has enabled the corporation to emerge as a super-individual, an entity positioned above and beyond the constraints of ordinary law. Whyte (Reference Whyte2018) conceptualizes this development as a shift from repressive inclusion to enriched inclusion. Drawing on, but also departing from, Agamben’s ontology of legal power, Whyte (Reference Whyte2018) argues that the production of bare life is not law’s only function. Rather than merely repressing or excluding, sovereign power operates at the threshold of inclusive exclusion to generate an exceptional form of legal subjectivity, an “enriched” citizenship endowed with rights, immunities, and privileges that remain inaccessible to the majority (Whyte Reference Whyte2018). Just as sovereignty renders some lives legally disposable, it simultaneously produces others as legally enhanced (Whyte Reference Whyte2018). Hence, the colonial state of exception shaped the corporation’s legal subjectivity as the paradigmatic form of global capitalism and the privileged actor of the offshore world.

The corporate form is not merely a legal abstraction but a vehicle for reproducing class domination (Whyte Reference Whyte2020). Therefore, the corporate citizen concentrates power and legal privilege in the hands of real citizens, the owners and shareholders, who stand behind the corporate veil (Tombs and Whyte Reference Tombs and Whyte2015). Although the modern use of the term corporate citizen is recent, its foundations lie in the doctrine of corporate personhood, the idea that an incorporated body can possess a distinct identity and legal personality, separate from its members (Whyte Reference Whyte2018, Reference Whyte2020).Footnote ¹⁵ This legal conceptualization enabled corporations to avoid death duties, shield assets from shareholders’ personal debts, and shift tax obligations onto the entity itself (Whyte Reference Whyte2018). Furthermore, the corporation has been increasingly recognized human rights by the international legal system and by regional courts (Khoury and Whyte Reference Khoury and Whyte2017). The rights ascribed to the corporate person reflect a broader politics of inclusive exclusion, where the legal burden of duties, such as taxation, is nominally imposed on the entity but rarely disrupts the flow of wealth to its shareholders and beneficiaries (Whyte Reference Whyte2018).

As Chapter 3 shows, the gap between formal requirements and actual enforcement exposes the fiction at the heart of corporate accountability (Whyte Reference Whyte2018). By the mid-twentieth century, corporate tax rates in Western liberal democracies often rivaled, or even exceeded, personal income tax rates (Whyte Reference Whyte2018; Zucman Reference Zucman2015). Today, this dynamic has reversed, with corporate tax burdens significantly reduced and the weight of taxation increasingly shifting onto individuals. Popular rhetoric around “double taxation,” the idea that both corporate profits and shareholder dividends are taxed, obscures this shift. In practice, many jurisdictions grant dividend allowances taxed at preferential rates, and corporate tax codes are riddled with exemptions, loopholes, and deferrals (Whyte Reference Whyte2018). Corporate taxes account for a shrinking share of public revenue, contributing just 8% on average across OECD countries, while governments grow more reliant on personal income taxes (Whyte Reference Whyte2018). This reflects a deeper structural reality: corporate citizenship is predicated on the notion that legal liability resides with the corporate entity, while the material benefits, profits, privileges, and protections accrue to the private actors concealed behind the corporate veil (Khoury and Whyte Reference Khoury and Whyte2017; Whyte Reference Whyte2018).

This divergence between corporate and individual taxation, exacerbated by OECD policies, has only deepened with the rise of neoliberalism. Corporations now routinely leverage multiple nationalities and transnational legal strategies to minimize their obligations (Whyte Reference Whyte2018). One prominent example is the proliferation of Export Production Zones (EPZs) or Special Economic Zones (SEZs), which offer foreign investors exemptions from taxes, labor laws, and environmental regulations (Rivera-Quiñoes Reference Rivera-Quiñones2025). SEZs exemplify a global trend in which corporations are entrusted with public authority, becoming responsible for service provision, revenue collection, and rule enforcement (Whyte Reference Whyte2018). This transformation has restructured the citizen-state relationship in the global North and entrenched colonial domination in the global South. In many cases, these arrangements are not chosen freely but imposed, often as preconditions for loans or foreign investments orchestrated by international financial institutions (Tombs and Whyte Reference Tombs and Whyte2015).

These dynamics reveal a powerful expression of the colonial state of exception, in which the logic of inclusive exclusion manufactures a stratified form of citizenship. While ordinary citizens face heightened surveillance, taxation, and exclusion, corporate citizens move freely, rewrite obligations, and exercise authority without meaningful democratic accountability. OFCs exemplify this condition: legally constituted zones where the logic of inclusive exclusion sustains an extractive global order at the detriment of its own populations. As Pahuja (Reference Pahuja2011) argues, international law has long served to produce the conditions of underdevelopment through the very promise of development – here too, law generates the appearance of inclusion while securing structures of dispossession.

2.1 Structuring Offshore Finance: Early Legal History of Exceptionality and Corporate Power

Historians of offshore finance typically identify three key phases in the expansion of tax havens (Kunz Reference Kunz2024; Ogle Reference Ogle2017, Reference Ogle2020). The initial phase emerged after World War I, primarily within European jurisdictions. The second phase, occurring post-World War II, witnessed the expansion of offshore finance beyond Europe. The third, which unfolded during the 1970s and 1980s, saw OFCs proliferate in Caribbean and Pacific island-states and colonial territories. As shown in Chapter 4, following the 2008 financial crisis, the offshore world underwent another transformation, marked by the emergence of fintech and colonial OFCs assuming a prominent role in crypto-finance. In this sense, the history of offshore finance is inextricably linked to global crises and structural shifts in the global economyFootnote ²² (Harrington Reference Harrington and Brincker2013). In each instance, colonial OFCs served as spaces for capital protection and stabilization of economic crises, demonstrating how the colonial world is at the center of offshore finance.

In tandem with this temporalization, Palan et al. (Reference Palan, Murphy and Chavagneux2010) identify three key practices that collectively shaped the structural foundations of contemporary offshore finance: US incorporation laws, British virtual residencies, and Swiss banking secrecy.Footnote ²³ First, US flexible incorporation laws were developed primarily when corporations and their incorporation were highly restrictive in Common Law countries, a lasting consequence of the 1720 South Sea Bubble (Harrington Reference Harrington and Brincker2013; Palan et al. Reference Palan, Murphy and Chavagneux2010). New Jersey and Delaware were early pioneers in facilitating the incorporation of corporations, enabling their rapid creation. Palan et al. (Reference Palan, Murphy and Chavagneux2010) show how in the 1880s, New Jersey adopted flexible incorporation laws to attract corporate headquarters, and in 1899, the state passed legislation allowing corporations to own equity in other companies, effectively legalizing holding companies. This legislation introduced the concept of incorporation within incorporation – economically linked corporate groups – and paved the way for practices such as transfer pricing (Palan et al. Reference Palan, Murphy and Chavagneux2010).

Delaware followed New Jersey in 1898, explicitly drafting legislation to attract corporate interests (Palan et al. Reference Palan, Murphy and Chavagneux2010). Delaware’s corporate law is pivotal in the global infrastructure of tax havens due to its uniquely favorable legal and regulatory framework.Footnote ²⁴ Central to this framework are low corporate taxation, minimal disclosure requirements, and legal protections that insulate shareholders (Palan et al. Reference Palan, Murphy and Chavagneux2010). Delaware’s corporate statutes provide exceptional flexibility, enabling multinational corporations to create sophisticated structures to manage assets, obscure beneficial ownership, and strategically minimize tax liabilities (Palan et al. Reference Palan, Murphy and Chavagneux2010). Today, 66% of all US Fortune 500 companies are incorporated in Delaware.Footnote ²⁵

Second, British courts pioneered the concept of “virtual residencies,” allowing companies to incorporate in Britain without being subject to taxation (Palan et al. Reference Palan, Murphy and Chavagneux2010). This legal structure is often cited as foundational to the entire offshore finance system. Landmark cases, such as Egyptian Delta Land and Investment Co. Ltd v. Todd (1929), defined Britain’s status as a jurisdiction where companies could evade taxation if their operations were conducted abroad, often in colonial settings, effectively transforming Britain into the center of the offshore economy (Ogle Reference Ogle2017; Shaxson Reference Shaxson2011; Picciotto Reference Picciotto1992; Palan Reference Palan2003; Palan et al. Reference Palan, Murphy and Chavagneux2010). This British court ruling established a precedent for the entire British Empire, which was later adopted by jurisdictions such as Bermuda, the Bahamas, and the Cayman Islands.Footnote ²⁶ Ogle (Reference Ogle2017) emphasizes that many seminal tax law cases in the British Common law tradition emerged from the imperial context and multinational corporations, such as De Beers Consolidated Mines, operating across diverse jurisdictions.

Third, the emergence of strict banking secrecy in Switzerland complemented these legal transformations. Codified in the Banking Act of 1934, the Act protects banking secrecy under criminal law (Palan et al. Reference Palan, Murphy and Chavagneux2010). Triggered by financial instability stemming from the Great Depression, Swiss lawmakers intended to safeguard their banking system by enforcing “absolute silence” regarding client accounts (Palan et al. Reference Palan, Murphy and Chavagneux2010). This legal framework guaranteed that capital deposited within Swiss banks would remain inviolable, creating a model subsequently emulated globally (Palan et al. Reference Palan, Murphy and Chavagneux2010).

Together with Switzerland, the first generation of modern tax havens, Liechtenstein,Footnote ²⁷ Luxembourg,Footnote ²⁸ the Channel Islands, and, to a lesser extent, Bermuda and the Bahamas, emerged in response to the introduction of more expansive income taxes in Europe during and after World War I (Ogle Reference Ogle2017). Amid the economic chaos of the 1920s – encompassing inflation, political instability, and the redrawing of national borders – wealthy individuals and corporations sought refuge in jurisdictions that could offer safety and secrecy (Ogle Reference Ogle2017). For instance, in the 1920s, the Swiss canton of Zug adopted incorporation laws similar to those enacted in the US (Ogle Reference Ogle2017). Banks operating in Basel began allowing international investors to register virtual holding companies and establish trusts (Palan et al. Reference Palan, Murphy and Chavagneux2010). Furthermore, by the late 1920s, Zurich had emerged as a hub for sociétés anonymes and mailbox companies (Palan et al. Reference Palan, Murphy and Chavagneux2010). Investments and deposits in Swiss banks were later reinvested internationally, often in projects and endeavors that contributed to the European empires’ expansion in the colonial world (Ogle Reference Ogle2017, Reference Ogle2020; Palan et al. Reference Palan, Murphy and Chavagneux2010). In a cyclical process, wealth extracted from colonies circulated through offshore networks before returning as investment in colonial projects, thereby deepening and extending colonial domination across the global South.

The Channel Islands and Gibraltar also contributed to the early configuration of offshore finance (Palan et al. Reference Palan, Murphy and Chavagneux2010). Jersey and Guernsey were already considered tax havens by the 1920s, prompting British calls for anti-avoidance legislation (Hampton and Christensen Reference Hampton and Christensen1999). The islands resisted, citing constitutional privileges, a defense that remains central to their offshore status. However, Jersey’s offshore sector only developed in the 1960s with the rise of global finance (Hampton and Christensen Reference Hampton and Christensen1999, Reference Hampton and Christensen2002; Palan et al. Reference Palan, Murphy and Chavagneux2010). The Channel Islands’ experience with offshore finance underscores an important model for the development of the offshore world in the Caribbean.

2.2 The Post-World War II Era and the Making of Colonial OFCs

Offshore finance expanded alongside and often in opposition to the Bretton Woods system (Palan et al. Reference Palan, Murphy and Chavagneux2010), thriving with implicit support from governments in the global North (Ogle Reference Ogle2017). These states promoted OFCs as tools to bypass domestic regulations, taxation, and capital controls (Ogle Reference Ogle2017). As corporate income tax rates in the global North soared to unprecedented levels – often exceeding 40% to 50% – new tax havens emerged, while older ones were reactivated and repurposed. Many of these jurisdictions were still colonies or recently decolonized from European empires (Ogle Reference Ogle2017). Throughout the colonial period, tax regimes in the territories were already uneven, rife with exemptions, inconsistently enforced, and designed to privilege Europeans and foreign investors over local populations (Ogle Reference Ogle2017). By the 1940s and 1950s, the colonial world remained an attractive counterpoint to the heavily taxed metropoles, setting the stage for the institutionalization of offshore finance (Ogle Reference Ogle2017).

The emergence of the Euromarket in the late 1950s is central to this transformation (Ogle Reference Ogle2017). Often referred to as the Eurodollar, the Euromarket was shaped by specific global North regulatory and political choices.Footnote ²⁹ In 1957, the Bank of England issued a pivotal decision: transactions carried out by UK banks with non-UK lenders and borrowers would not be treated as domestic, even when those transactions physically occurred in BritainFootnote ³⁰ (Ogle Reference Ogle2017; Palan et al. Reference Palan, Murphy and Chavagneux2010). This nonintervention created a space of exception, a de facto regulatory haven, through which the Euromarket evolved not in opposition to the state but in concert with it. As a result, the City of London became the epicenter of a broader offshore financial system extending across the remains of the British Empire and beyond (Harrington Reference 87Harrington2024; Ogle Reference Ogle2017; Palan et al. Reference Palan, Murphy and Chavagneux2010; Shaxson Reference Shaxson2011).

Two central financial instruments drove the Euromarket’s exponential growth: Eurodollars and Eurobonds (Ogle Reference Ogle2017). Eurodollars – US dollars held outside the jurisdiction of the US Federal Reserve and European central banks – offered investors and corporations a means to evade domestic financial oversight (Palan et al. Reference Palan, Murphy and Chavagneux2010; Shaxson Reference Shaxson2011). Eurobonds, in contrast, were simultaneously issued in multiple jurisdictions by multinational underwriting syndicates, enabling regulatory arbitrage and tax minimization on a global scale (Ogle Reference Ogle2017). Unlike traditional bonds, which were nationally issued and taxed, Eurobonds operated in a space of exception, free from local monetary control. These instruments, emerging under the pretenses of financial efficiency, became central tools in restructuring global capital flows, disembodied from national oversight and increasingly insulated from democratic accountability (Hoang Reference Hoang2022; Ogle Reference Ogle2017).

US banks utilized this offshore infrastructure to circumvent the constraints imposed by New Deal-era financial regulations (Ogle Reference Ogle2017). These included the McFadden Act (1927), which prohibited interstate banking; the Glass-Steagall Act (1933), which separated commercial and investment banking; Regulation Q, which capped interest rates on time deposits (Ogle Reference Ogle2017); and lending restrictions that prevented banks from extending more than 10% of their capital to a single borrower (Palan et al. Reference Palan, Murphy and Chavagneux2010). Together, these measures produced a highly regulated financial system that multinationals sought to evade. Thus, US banks began establishing branches in London, European, and Caribbean jurisdictions, enabling them to operate legally outside the US regulators’ jurisdiction while maintaining proximity to the global financial system (Ogle Reference Ogle2017). The introduction of the Interest Equalization Tax (IET) in 1963, a measure intended to discourage capital outflows by taxing foreign bond investments, paradoxically accelerated the shift to offshore markets (Ogle Reference Ogle2017; Palan et al. Reference Palan, Murphy and Chavagneux2010). US firms avoided the IET by keeping capital abroad and began using the Euromarket to fund operations (Ogle Reference Ogle2017). By the mid-1960s, Citibank, Chase Manhattan, and Bank of America had all opened operations in Britain,Footnote ³¹ joining their British counterparts in Jersey, Guernsey, and the Isle of Man (Palan et al. Reference Palan, Murphy and Chavagneux2010).

This transformation cannot be reduced to regulatory evasion alone; rather, it reflects a deeper restructuring of international monetary and state power (Binder Reference Binder2023, Reference Binder2024). It marked the outsourcing of monetary power to offshore spaces governed not by central banks, but by transnational banks and legal structures emerging from the Common Law. Offshore US dollars, created through Eurodollar markets, were issued outside US jurisdiction yet remained functionally tied to the dollar standard, allowing global banks to co-govern liquidity and monetary policy (Binder Reference Binder2024). Binder (Reference Binder2024) shows that the ability to create US dollars offshore, without Federal Reserve oversight, enabled a form of “outsourced empire,” in which US power is exercised through contracts, law, and liquidity rather than territory.

Alongside this outsourcing process, the creation of International Business Companies (IBCs), also known as “non-resident” or “exempt” companies, marked an important shift in the 1960s (Palan et al. Reference Palan, Murphy and Chavagneux2010). While their structures vary, IBCs typically follow the British virtual residency model. That is, IBCs are incorporated in jurisdictions where they do not operate, thereby benefiting from near-zero tax rates, minimal reporting requirements, and limited transparency (Palan et al. Reference Palan, Murphy and Chavagneux2010). For tax havens, IBCs attract foreign capital while allowing local businesses to be taxed (Palan et al. Reference Palan, Murphy and Chavagneux2010). British Treasury and Bank of England officials documented the adoption of IBC laws in Caribbean territories as early as 1968, including Antigua, Barbados,Footnote ³² Jamaica, and St. Vincent (Palan et al. Reference Palan, Murphy and Chavagneux2010). Nonetheless, the 1980s BVI’s IBC law was particularly successful, spurring a surge in company registrations and prompting other Caribbean jurisdictions to follow its model (Sybblis Reference Sybblis2023).

The success of the Euromarket and the emergence of IBCs further reflect the enduring imperial logics of offshore finance. Although the formal British Empire waned, its financial geographies were reconstituted through a network of Crown Dependencies and BOT anchored by the City of London (Ogle Reference Ogle2017, Reference Ogle2020; Shaxson Reference Shaxson2011). These islands of exception became key nodes in global finance, offering flexible legal regimes and fiscal opacity tailored to the corporate citizen and the ultra-wealthy.

2.3 Reconfiguring Offshore Finance, 1970–1990

The oil crisis and the subsequent crises in liberal democracies that engulfed the North Atlantic world in the 1970s significantly reshaped global finance and economic policies, setting the stage for the rise of neoliberalism. Policies and regulatory frameworks initially crafted for OFCs began migrating into the global North from the late 1970s onward. This shift included substantial reductions in marginal tax rates on high-income earners and widespread deregulation of financial markets, effectively blurring the boundaries between onshore and offshore practices (Ogle Reference Ogle2017). Financial deregulation, driven by competitive pressures from the Euromarket, contributed significantly to the neoliberal turn experienced by global North economies during the 1980s (Ogle Reference Ogle2017).

New York City, facing economic stagnation and budget crises in the mid-1970s, also sought to reclaim the offshore banking business lost to Caribbean OFCs (Palan et al. Reference Palan, Murphy and Chavagneux2010). Ogle (Reference Ogle2017) shows how in 1978, the New York State Legislature enacted legislation establishing International Banking Facilities (IBFs), which became operational in 1981 after approval by the Federal Reserve. These IBFs allowed banks to conduct foreign business domestically, effectively moving offshore finance back onshore, granting regulatory benefits such as reduced reserve requirements and exemptions from state and local taxes (Ogle Reference Ogle2017). Despite initial optimism and a rush by banks to establish these facilities, the expected economic benefits to local economies failed to materialize (Ogle Reference Ogle2017). However, as shown later, the IBF regulatory principle was crucial in enhancing the corporate tax haven in PR and contributing to its development into an OFC.

By the late 1970s, a new class of tax havens emerged, jurisdictions that did not rely on secrecy or zero taxation but functioned as conduits for multinational capital (Garcia-Bernardo et al. Reference Garcia-Bernardo, Fichtner, Takes and Heemskerk2017). The Netherlands became a prime example. From the mid-1970s, the Dutch government reshaped its tax laws to attract MNEs seeking “tax-efficient” jurisdictions, transforming the country into a preferred headquarters location for firms such as Volkswagen, IKEA, and Mittal Steel (Palan et al. Reference Palan, Murphy and Chavagneux2010). Central to this shift was the proliferation of shell companies (Palan et al. Reference Palan, Murphy and Chavagneux2010). By 2005, over 42,000 financial holding companies were registered in the Netherlands, with many clustered at just a few addresses in Amsterdam (Palan et al. Reference Palan, Murphy and Chavagneux2010). Nearly half were owned through other OFCs, including the Netherlands Antilles,Footnote ³³ BVI, and Switzerland, revealing a complex structure designed to channel capital through Dutch treaty networks and minimize withholding taxes (Palan et al. Reference Palan, Murphy and Chavagneux2010).

One of the more revealing cases of this conduit logic was the so-called Dutch Sandwich,Footnote ³⁴ a tax-avoidance structure that relied on the Netherlands Antilles conduit companies to route investment into and out of the US (Ogle Reference Ogle2017; Palan et al. Reference Palan, Murphy and Chavagneux2010). In response to the 1963 Interest Equalization Tax (IET) discussed earlier, US authorities tolerated, and even actively enabled, the use of Netherlands Antilles conduit companies to bypass withholding taxes (Ogle Reference Ogle2017). This is yet another example of how European powers utilized Caribbean colonial territories to facilitate tax evasion and secrecy. Although the US Treasury moved to end the IET in 1987, it underestimated how embedded the structure had become; 30% of the $32 billion in outstanding Eurobonds were held through Netherlands Antilles shell companies (Palan et al. Reference Palan, Murphy and Chavagneux2010). The Netherlands and its Caribbean territories embody the shift in offshore finance from secrecy to treaty-based arbitrage (Palan et al. Reference Palan, Murphy and Chavagneux2010).

Ireland followed a similar path to develop into an OFC (O’Boyle and Allen Reference O’Boyle and Allen2021). Building on its Shannon export zone, it launched the International Financial Services Centre (IFSC) in Dublin in 1987, offering a 12.5% corporate tax rate and regulatory waivers for financial operations. By 2003, Ireland’s total stock of foreign investment had reached €1.041 trillion, eight times its GDP, with 72% of it linked to the IFSC (Palan et al. Reference Palan, Murphy and Chavagneux2010). Half the firms operating there were US-owned, and by 2000, Ireland had become the top location for reported pre-tax foreign profits by US corporations (Palan et al. Reference Palan, Murphy and Chavagneux2010). O’Boyle and Allen (Reference O’Boyle and Allen2021) noted that €100 billion in profits pass through Ireland every year with no intention other than to avoid taxes. The Netherlands and Ireland exemplify how European-OECD-jurisdictions have leveraged their legal systems, treaty networks, and regulatory arbitrage to embed themselves within global financial circuits.

Ogle (Reference Ogle2017) argues that by the 1980s, the list of active OFCs included a geographically diverse range of jurisdictions, from Bahrain, the Cayman Islands, Delaware, Hong Kong, Lebanon, Malta, Mauritius, Panama, Singapore, and Switzerland. Recent scholarship has examined the capitalist and legal dynamics underpinning the development of the global offshore economy. For instance, Slobodian (Reference Slobodian2023) and Abrahamian (Reference Abrahamian2024) have critically analyzed the capitalist processes producing a network of extraterritorial spaces, legal carve-outs, and special economic zones designed to facilitate the concealment and protection of wealth. Their contributions provide an important understanding of the offshore economy as a fragmented yet interconnected legal geography, where the logic of inclusive exclusion is pervasive, enabling access for capital while denying full rights, protections, and benefits to local populations. In this Element, I build on these insights by centering the Caribbean and tracing the colonial emergence of an archipelago of islands of exception, in which legal and economic asymmetries are produced and sustained through colonial legality.

2.4 Recentering the Caribbean: OFCs in Colonial Territories

The emergence of islands of exception in the Caribbean is embedded in the global transformations unleashed by the wave of decolonization that began in the 1960s. This process was driven by three interrelated factors that together enabled the consolidation of Caribbean OFCs (Atiles and Whyte Reference Atiles and Whyte2025).

First, the constitutional and political status of Caribbean territories, shaped by enduring colonial ties to European powers and the US, created the legal conditions for their conversion into OFCs (Rivera-Quiñones Reference Rivera-Quiñones2025). While many jurisdictions retained limited autonomy over taxation and economic policy, they remained subordinated to their respective metropoles. As former colonies across the global South gained independence, capital flight increasingly flowed into Caribbean colonial jurisdictions, which imperial elites perceived as more politically stable. In this sense, decolonization elsewhere generated demand for “safe havens” capable of preserving elite wealth, thereby creating the conditions for the development of offshore finance in the Caribbean (Harrington Reference 87Harrington2024; Ogle Reference Ogle2017, Reference Ogle2020; Palan Reference Palan2003). For instance, in PR and the US Virgin Islands, congressional economic policy further entrenched these territories’ roles as tax havens within US imperial governance.

Second, geopolitical location and colonial imaginaries transformed Caribbean jurisdictions into both symbolic and material sites of offshore finance. While geographic isolation once provided physical secrecy, it now functions as a symbolic asset, branding these territories as idyllic financial and tourist paradises (Atiles and Whyte Reference Atiles and Whyte2025). Their proximity to the US, combined with colonial jurisdictional boundaries, facilitated their rise as offshore nodes within global financial networks (Koram Reference Koram2022; Palan et al. Reference Palan, Murphy and Chavagneux2010; Shaxson Reference Shaxson2011).

Racial and colonial hierarchies were central to this process, shaping both the governance and marketing of Caribbean OFCs (Dean Reference Dean2025; Rivera-Quiñones Reference Rivera-Quiñones2025). Promoted as low-cost alternatives to industrial development, OFCs were framed as pragmatic solutions to colonial economic dilemmas (Ogle Reference Ogle2017, Reference Ogle2020). British authorities, in particular, championed this model as a means for remaining colonies to achieve financial self-sufficiency while reducing metropolitan obligations (Harrington Reference 87Harrington2024; Vlcek Reference Vlcek2008).Footnote ³⁵ These dynamics also intensified regional vulnerability to displacement, dispossession, and climate catastrophe, binding the Caribbean to a legal and economic order that continually reasserts colonial hierarchies.

Third, postwar political economy and global financial restructuring positioned Caribbean OFCs as key sites for wealth protection and elite reproduction (Atiles and Whyte Reference Atiles and Whyte2025). As Keynesian welfare states expanded, taxation and currency controls were dismantled, Britain’s Common Law tax-neutral colonies emerged as attractive destinations for preserving private wealth (Harrington Reference 87Harrington2024; Ogle Reference Ogle2017). This process accelerated with the neoliberal restructuring of the global economy in the 1980s, as small islands became spaces for legal and financial experimentation (Ogle Reference Ogle2017). Lawyers, accountants, and other financial service professionals, often based in the global North, piloted offshore models tailored to the evolving needs of global capital (Ogle Reference Ogle2017). In this context, Caribbean OFCs served to preserve elite dominance in both the global North and South. For Britain, they provided mechanisms for returning colonial elites to shield wealth from domestic taxation (Koram Reference Koram2022). For the US, Caribbean jurisdictions became crucial sites for recycling capital extracted from Latin America through both licit and illicit channels (Shaxson Reference Shaxson2011). In both cases, offshore finance enabled imperial powers to accumulate capital while insulating domestic economies and sustaining geopolitical alliances.

These three factors are exemplified in the emergence of OFCs in the Cayman Islands and the BVI, as well as in ongoing efforts to transform PR from a corporate tax haven into a broader OFC. The following discussion examines these cases to illustrate how these dynamics have shaped, and continue to shape, the Caribbean’s offshore financial landscape.

2.5 Offshore Finance as a Decolonial Project?

Thus far, we have examined how the logics of inclusive exclusion structured the colonial offshore economy. However, framing these developments solely as impositions by colonial powers overlooks the political agency of colonized peoples. In many cases, the rise of OFCs reflects strategic decisions by local elites and institutions responding to limited economic opportunities.

Sybblis (Reference Sybblis2024) challenges the interpretation of OFCs as inherently corrupt, arguing that offshore financial law can, in some colonial contexts, serve as a form of practical autonomy. While not decolonization in a sovereign sense, this autonomy allows for internal self-governance and reduced colonial oversight. Analyzing Bermuda, the BVI, and the Cayman Islands, Sybblis (Reference Sybblis2024) shows that these BOTs, though not fully sovereign, have achieved significant economic independence. Unlike many of their Caribbean neighbors, who pursued independence and later faced debt, coups, and internationally imposed structural adjustment programs, these jurisdictions remained under British rule while developing successful offshore financial sectors.

Sybblis (Reference Sybblis2024) argues that the shift to financial services in some BOT and postcolonial jurisdictions was a strategic response to the constraints of imperialism. It allowed them to diversify beyond extractive industries and tourism, developing legal frameworks facilitating easy incorporation, favorable corporate governance, and specialized commercial courts. This institutional infrastructure attracted international business, fostering economic growth and financial independence (Sybblis Reference Sybblis2023).

However, not all colonial OFCs followed this path. For instance, Anguilla, Montserrat, and Turks and Caicos, among other BOTs, have struggled with weak governance, corruption, and limited state capacity, hindering their ability to convert financial flows into sustainable development or autonomy (Sybblis Reference Sybblis2024). Yet, it is important to note that Sybblis (Reference Sybblis2024) does not aims to romanticize offshore finance or ignore its harms, in his work he foreground the agency of historically subordinated communities and peoples. His work calls for a more nuanced understanding of how some have used legal-financial tools to pursue autonomy and urges global regulatory frameworks to reflect these histories and aspirations.

In dialogue with Sybbli’s (Reference Sybblis2024) work and other critical scholars (Dean and Waris Reference Dean and Waris2021), I argue that understanding the operability of colonial legality and how colonized people accommodate colonialism is a central component of analyzing the colonial offshore economy. At the same time, this perspective should complement, rather than substitute for, a critique of imperial power and the devastating effects of colonial policies. Thus, the critique of financial imperialism and colonial plunder enabled by corporate citizens should be at the center of discussions of the legal and politico-economic processes that constitute these territories as islands of exception.

As this chapter has shown, the development of Caribbean OFCs exemplifies the historical dynamics of wealth extraction constituted through the colonial state of exception. That is, through logics of inclusive exclusion, colonial territories have been strategically accommodated within imperial legal systems in ways that facilitate financial resettlement and the preservation of class power. While these jurisdictions attract vast amounts of global wealth, the benefits flow disproportionately to institutions and elites in the global North, deepening inequality and reinforcing racialized hierarchies. In this sense, offshore finance perpetuates colonial plunder through financial imperialism.

3.1 Structures of Impunity: Secrecy and Trust

As discussed in the introduction, the primary function of secrecy in OFCs is to provide a legal shield for corporations and individuals seeking to escape scrutiny. The defining characteristic of these jurisdictions is their ability to offer legislative and financial secrecy to entities based elsewhere, enabling them to obscure ownership structures, financial transactions, money, and the very existence of assets from tax authorities and regulatory bodies (Cobham et al. Reference Cobham, Janský and Meinzer2015; Palan et al. Reference Palan, Murphy and Chavagneux2010).

Approximately 36% of all profits generated by multinational corporations are channeled into secrecy jurisdictions globally (Tørsløv et al. Reference Tørsløv, Wier and Zucman2023). Atiles and Whyte (Reference Atiles and Whyte2025) noted that 68% of fossil fuel financing flows through subsidiaries in these jurisdictions, making it nearly impossible to track their financial activities. This opacity is not an accident, but a deliberate legal-political tactic used by major players in the global oil market. It is no coincidence that three of the world’s largest oil-producing countries – Saudi Arabia, the UAE, and Venezuela – are among the top three nations, with more than 50% of their wealth held offshore (Alstadsæter et al. Reference Alstadsæter, Johannesen and Zucman2019; Atiles and Whyte Reference Atiles and Whyte2025). This significant offshore capital flow exacerbates inequality and stymies efforts to track fossil fuel industry revenues, which continue to evade national and international regulatory frameworks (Atiles and Whyte Reference Atiles and Whyte2025).

The legal institution of the trust, a centuries-old creation of Anglo-American Common Law jurisprudence, has become central to the secrecy structures shaping offshore finance (Harrington Reference Harrington2017, Reference 87Harrington2024; Shaxson Reference Shaxson2011). Originally developed to manage and protect family wealth, trusts have evolved into sophisticated legal instruments that corporations use to obscure ownership, minimize tax obligations, and evade regulatory scrutiny (Harrington Reference Harrington2017; Tait Reference Tait2023, Reference Tait2025). At the core of the trust’s functionality is its capacity to bifurcate ownership: by separating legal from beneficial ownership, trusts enable control over assets without formal accountability (Palan et al. Reference Palan, Murphy and Chavagneux2010). This partitioning creates a legally distinct asset pool, offering advantages over corporate or contract law by facilitating securitization and liability isolation. As such, the trust operates not merely as a fiduciary arrangement but as a powerful property law tool for enclosing capital (Tait Reference Tait2023).

Trusts allow beneficiaries to enjoy the benefits of property while escaping its obligations (Tait Reference Tait2023, Reference Tait2025), which is a feature invaluable to corporate actors embedding trusts into global wealth chains to shelter assets and shift liabilities. Trusts are widely used in bond issuances, securitizations, and mutual funds to manage financial instruments and move liabilities off-balance sheet, concealing risk and enhancing credit profiles (Harrington Reference Harrington2017). The Cayman Islands, Jersey, and the BVI have established specialized legal frameworks for trust formation, offering features such as perpetual duration, minimal reporting, and discretionary beneficiary rules that allow corporations to retain effective control (Antoine Reference Antoine2007). The global expansion of offshore trusts is deeply tied to financialization, wherein increasingly abstract and mobile capital demands legal structures that facilitate flexibility and insulation from regulatory oversight (Harrington Reference Harrington2017; Tait Reference Tait2025).

Pistor (Reference Pistor2019) identifies trust as a central component in the legal coding of capital, transforming assets into durable, self-replicating entities by granting them priority, convertibility, and legal protection. This coding, Pistor (Reference Pistor2019) suggests, is not democratically produced but crafted by elite legal actors and enforced by the state. New forms of trust, such as perpetual, charitable, and purpose trusts, used to hold corporate shares or intellectual property, reflect this strategic evolution. Trusts are also used to acquire luxury real estate and secure high-value assets like jets and yachts (Harrington Reference Harrington2017). In cities like New York and London, they obscure ownership of vacant luxury properties, driving up housing prices and intensifying gentrification (Tait Reference Tait2023).

Meanwhile, the competitive deregulation of trust law within the US has turned jurisdictions such as South Dakota, Wyoming, and Nevada into domestic secrecy jurisdictions (Tait Reference Tait2025). The rise of trust-based secrecy highlights the flexibility of legal institutions in adapting to capitalist imperatives, enabling global asset protection and shielding corporate citizens from accountability.

3.2 Corporate Veil: Shell Companies and Tax Avoidance

A standard method companies use to restructure their tax liabilities is establishing shell companies in OFCs, which can be used to book profits and shift financial resources away from higher-tax jurisdictions (Atiles and Whyte Reference Atiles and Whyte2025). While public corporations are generally obligated to disclose accurate financial information to shareholders, investors, and analysts, shell companies enable corporate citizens to circumvent these obligations, creating myriad opportunities to present incomplete data to regulators and investors.

Furthermore, shell companies in OFCs create multi-layered corporate structures that facilitate “treaty shopping” or regulatory arbitrage, whereby firms route investments through jurisdictions that offer favorable double taxation treaties and low or zero withholding taxes. The Netherlands, Luxembourg, and Ireland are prominent examples of OECD members frequently employed in this way (Palan et al. Reference Palan, Murphy and Chavagneux2010). The Caribbean and Delaware are global hubs for shell companies. As shown in Chapter 2, the Cayman Islands host over 100,000 registered companies despite having a population of only about 65,000 (Palan et al. Reference Palan, Murphy and Chavagneux2010). At the same time, the BVI is estimated to house hundreds of thousands of shell companies (Sybblis Reference Sybblis2023). Jurisdictions like Bermuda and the Bahamas also contribute significantly to the establishment of shell companies in the Caribbean.

Another widely used form of tax avoidance is transfer pricing, in which companies manipulate the prices of goods or services exchanged between subsidiaries in different jurisdictions with varying tax rates (Deneault Reference Deneault2018; Hoang and Biron-Boileau Reference Hakelberg, Ahrens and Crasnic2026). This allows them to shift profits to low-tax jurisdictions, reducing their overall tax liabilities. PR has been historically a key node in the structure of transfer pricing, enabling pharmaceuticals, tech companies, and the retail industry to engage in this practice (Atiles Reference Atiles2024). The corporate citizen also uses intra-group loans or internal financing to move funds across borders, charging interest on the loans to reduce their tax obligations (Atiles and Whyte Reference Atiles and Whyte2025).

Additionally, corporations often use OFC to strategically relocate the legal ownership of IP, such as patents, trademarks, copyrights, and software licenses, into low-tax or no-tax jurisdictions (O’Boyle and Allen Reference O’Boyle and Allen2021). These arrangements enable firms to reroute royalty payments and licensing fees to OFCs, where such income is taxed at a lower rate. That is, corporations such as Apple, Google, and Microsoft, among others, may assign intellectual property rights or the ability to collect revenue from intangible assets to subsidiaries located in Ireland, the Netherlands, or PR, creating a complex web of financial transactions that obfuscates the actual location of profits (Tørsløv et al. Reference Tørsløv, Wier and Zucman2023). Using trusts and shell companies to hold IP allows corporations to avoid domestic IP taxation and to obscure the ultimate ownership and control of these lucrative intangible assets.

These techniques of obfuscation draw directly on the logic of inclusive exclusion embedded in the colonial state of exception, enabling the corporate citizen to leverage legal structures that render financial flows within these networks exceptionally difficult to trace.

3.3 Hiding Away: Shadow Banking and Financial Circuits

Shadow banking institutions, including private equity, private credit, and asset management companies, heavily utilize OFCs to facilitate their operations, often circumventing regulatory oversight. Significant offshore finance scholarship has focused on the impact of shadow banking on the 2008 financial crisis (Nesvetailova Reference Nesvetailova2015; Nesvetailova and Palan Reference Nesvetailova and Palan2019; Rixen Reference Rixen2013).

Atiles and Whyte (Reference Atiles and Whyte2025) underscored that shadow banking has become a primary financial source for the fossil fuel industry. Approximately two-thirds of financing for fossil fuel projects is conducted through offshore jurisdictions. Major global banks, such as Citigroup, JPMorgan, Wells Fargo, and Bank of America, utilize OFCs to underwrite bonds, engage in mergers and acquisitions, and channel substantial funds into the fossil fuel industry. Barclays, Deutsche Bank, and Credit Suisse finance significant infrastructure projects, including pipelines and drilling operations, using the financial opacity afforded by regulatory havens (Atiles and Whyte Reference Atiles and Whyte2025).Footnote ⁵²

Private equity firms benefit significantly from OFCs, using their secrecy and minimal regulation to obscure their activities and evade scrutiny. The Cayman Islands and the BVI are the leading destinations for private equity, with up to 80% of new private fundsFootnote ⁵³ domiciled in the former. The industry, which controls approximately $7.5 trillion in global assets and owns companies that employ millions worldwide, relies heavily on institutional investors, pension funds, endowments, and insurance companies for capital (Atiles and Whyte Reference Atiles and Whyte2025). Regular fundraising cycles involve attracting institutional investors, known as limited partners (LPs), who commit to new funds regularly. Furthermore, private credit has emerged as a key mechanism in the private equity industry, keeping debt and other liabilities off books, providing yet another avenue for secrecy.

The Paradise Papers leaks have explicitly exposed how private equity companies exploit Caribbean OFCs. For instance, in 2021, 80% of energy portfolios within the largest private equity firms remained invested in fossil fuels (Atiles and Whyte Reference Atiles and Whyte2025). Blackstone notably utilizes offshore structures to minimize tax liabilities, holding significant stakes in oil and gas production and infrastructure, even amidst substantial environmental controversies and accidents.Footnote ⁵⁴

Asset management firms such as BlackRock, Vanguard, and State Street also exploit offshore financial networks in the Caribbean (Atiles and Whyte Reference Atiles and Whyte2025). The Bahamas and the Offshore leaks demonstrate that these asset managers maintain holding companies and subsidiaries in Bermuda, the Bahamas, BVI, and Nevis.Footnote ⁵⁵ Similarly, as a result of the tax incentives enacted under Act 20 of 2012 (now consolidated into Act 60 as discussed in Chapter 2), PR has become an important emerging jurisdiction for financial services, wealth managers, and family offices. The colonial condition of PR has created a unique arrangement in which asset managers enjoy the fiscal benefits of an offshore environment while operating within the legal protections and regulatory umbrella of the US.

Multinational insurance and reinsurance companies similarly capitalize on offshore jurisdictions, using them as bases for substantial investments (Atiles and Whyte Reference Atiles and Whyte2025). Companies such as Zurich, Liberty Mutual, and Lloyd’s maintain substantial offshore presences in jurisdictions such as the Bermuda, Bahamas, Panama, Guernsey, and particularly St. Kitts and Nevis, a growing hub for insurance and banking secrecy.Footnote ⁵⁶ Captive insurance further highlights the centrality of offshore finance to shadow banking. KPMG actively promotes the Cayman Islands as a leading captive insurance hub, with over 657 entities managing $74.9 billion as of 2021 (Atiles and Whyte Reference Atiles and Whyte2025). Approximately 90% of Fortune 500 and S&P 500 companies utilized captive insurance arrangements, primarily domiciled in Caribbean OFCs and specific US states.Footnote ⁵⁷ Many captive insurance companies similarly operate from jurisdictions such as Bermuda, the Bahamas, and the Cayman Islands, benefiting from lower transparency and minimal regulatory scrutiny.

Hence, offshore finance facilitates shadow banking by significantly reducing corporate accountability, obscuring financial oversight, and enabling continued economic exploitation despite growing regulatory pressures from international organizations.

3.4 Elsewhere: Regulatory Arbitrage and Corporate Power

Spaces of exception structured as Special Economic Zones (SEZs), Free Trade Zones (FTZs), and Export Processing Zones (EPZs) provide corporations with expansive legal exemptions from financial disclosure, labor protections, environmental regulations, and civil and criminal liability (Abrahamian Reference Abrahamian2024; Hall et al Reference Hall, Antonopoulos, Atkinson and Wyatt2023; Slobodian Reference Slobodian2023). SEZs in OFCs enable corporations to exploit global disparities in regulatory standards, thereby minimizing costs while maximizing control over labor, capital, and environmental risks.

Across sectors, SEZs offer an escape from labor law compliance, minimum wage laws, occupational safety standards, and union protections (Cotula Reference Cotula2017). Workers in these spaces frequently experience disproportionately high rates of occupational illness, injury, and fatality, consequences of production models designed to be insulated from social and legal accountability (Atiles and Whyte Reference Atiles and Whyte2025). Furthermore, in recent years, SEZs have undergone a significant transformation, shifting from industrial production to accommodating digital activities, including cryptoassets, art storage, and illicit art trafficking, among other illicit activities (Abrahamian Reference Abrahamian2024). SEZs are pervasive, providing mobile and highly adaptable legal accommodations for corporate citizens.

Corporate citizens use OFCs to sidestep financial regulations, such as anti-money laundering provisions, international banking supervision, and know-your-customer rules. Combined with their capacity to host shell companies and Special Purpose Vehicles, financial entities use OFCs to shuffle assets, liabilities, and risk across borders with little traceability.

For instance, hedge funds’ significant presence in OFCs underscores the importance of the legal design and regulatory exemptions offered by Caribbean jurisdictions. Fichtner (Reference Fichtner2014) observes that hedge funds are lightly regulated by both their home countries, primarily the US, UK, and Japan, and by Caribbean OFCs that are subject to the sovereignty of the UK and the US. Most hedge funds are legally domiciled in the Cayman Islands, followed by other BOTs. Fichtner (Reference Fichtner2014) also notes that in 2011, the largest hedge fund administrator in the world was the Curaçao International Trust Company, based in Curaçao – an OFC under Dutch sovereignty.

A significant and growing share of global FDI is channeled through Caribbean OFCs, often via shell companies that obscure ownership, purpose, and capital flows. Roughly one-third of FDI by multinational corporations is routed through OFCs (Palan et al. Reference Palan, Murphy and Chavagneux2010). As noted in Chapter 2, the BVIFootnote ⁵⁸ ranked among the top five global FDI destinations in 2023, receiving $40 billion in FDI, behind only the US, Singapore, Hong Kong, and Canada. The Cayman Islands followed in eleventh place with $28.13 billion. Contrary to the conventional view of FDI as productive investment, Haberly and Wójcik (Reference Haberly and Wojcik2015a) estimate that 30–50% of global FDI stock is channeled through offshore networks of shell companies, which function not as engines of economic activity but as vehicles for regulatory arbitrage and detachment from legal and territorial accountability.

These capital flows are not random; they follow historical, political, and geographic patterns rooted in colonial legacies. Haberly and Wójcik (Reference Haberly and Wojcik2015b) demonstrate that offshore FDI networks are highly centralized and shaped by former imperial powers, which continue to influence the legal and financial systems of their former colonies. Offshore FDI enables capital flight from developing economies, distorts national statistics, erodes public revenues, and weakens regulatory oversight. These dynamics of wealth extractions attest to the structures of global wealth chains (Seabrooke and Wigan Reference Seabrooke and Wigan2017), and their use of shell companies, trusts, and offshore entities to evade regulation. Through these mechanisms, the corporate citizen shifts risk from shareholders to workers, from corporations to communities, and from private wealth to public resources.

3.5 Extraterritorial Justice: International Commercial Courts

In recent decades, International Commercial Courts (ICCs) have emerged as pivotal institutions in the reconfiguration of global legal-financial governance (Abrahamian Reference Abrahamian2024; Antonopoulou Reference Antonopoulou2024; Basedow Reference Basedow2024; Gu and Tam Reference 86Gu and Tam2022; Ogle Reference Ogle2024b). ICCs should be situated within broader trends of neoliberal globalization, forum marketing, and legal arbitrage, as they function as nodes in a global network of private adjudication intricately connected to OFCs, SEZ, and the broader global political economy. Although their rise is typically associated with the Middle East (e.g., Dubai, Qatar), Asia (e.g., Kazakhstan, Singapore, and China), and Europe (e.g., London, Germany, the Netherlands), the Caribbean has played a role in these transformations. According to Gu and Tam (Reference 86Gu and Tam2022), there are currently thirteen major ICCs worldwide, yet their analysis does not consider Caribbean courts, overlooking a region where similar adjudicatory transformations are underway.

ICCs are specialized domestic tribunals – contrary to their name, they are not international law organisms – embedded within national legal orders (Basedow Reference Basedow2024). These courts typically handle cross-border commercial disputes of considerable monetary value, relying on flexible procedural frameworks comparable to those of international arbitration, including multilingual proceedings and the appointment of overseas judges or foreign legal experts (Gu and Tam Reference 86Gu and Tam2022). Historically, ICCs have drawn inspiration from long-established models, such as the London Commercial Court (established in 1895), the US Court of International Trade (originating in 1890), and the Commercial Division of the New York State Supreme Court (established in 1995). These courts emerged to serve commercial actors in global financial centers, providing legal legitimacy to transnational contracts, corporate governance, and investment flows (Basedow Reference Basedow2024).

Contemporary ICCs adapt and extend these traditions in response to market pressures, functioning not as purely state initiatives but as institutions frequently promoted by elite law firms and transnational legal networks eager to expand commercial litigation markets (Basedow Reference Basedow2024; Gu and Tam Reference 86Gu and Tam2022). According to Basedow (Reference Basedow2024:1767), ICCs exhibit four common features: (1) they adjudicate transnational business disputes; (2) they have a standing bench of assigned judges rather than party-appointed arbitrators; (3) they allow resolution based on foreign law, frequently English or New York law, often operating in English-language; and (4) they address high-value disputes. Many ICCs operate within SEZs as “Common Law spaces” distinct from local legal systems (Dimitropoulos Reference Dimitropoulos2021). For example, the Qatar Financial Centre Courts, Dubai International Financial Centre Courts, Abu Dhabi Global Market Courts, and the Astana International Financial Center Court adopt Common Law to “boost investor confidence” through familiar legal rules and English-language proceedings (Abrahamian Reference Abrahamian2024; Ogle Reference Ogle2024b). Other ICCs, such as those in Singapore, the Netherlands, and China, operate as specialized divisions within their national court hierarchies rather than as separate entities based in SEZs.

Forum marketing has become central to the proliferation of ICCs. Antonopoulou (Reference Antonopoulou2024) describes how ICCs engage in active branding, high-profile judicial appointments, and reputational cultivation to secure their place in the global legal marketplace, catering to corporate elites. Yet these developments raise normative concerns.Footnote ⁵⁹ As Alcolea (Reference Alcolea2022) warns, ICCs risk commodifying justice, eroding local legal sovereignty, and deepening power asymmetries. By diverting high-value disputes from domestic courts, ICCs may weaken national legal systems and serve as reputational laundering devices, lending credibility to jurisdictions with questionable governance (Alcolea Reference Alcolea2022).

As shown in Chapter 2, the Cayman Islands, Bermuda, and the BVI have developed ICCs modeled on English legal traditions, reinforcing and further diversifying their status as OFCs (Sybblis Reference Sybblis2023). The Cayman Islands’ Financial Services Division, for example, handles hedge fund and cross-border disputes with international judges versed in transnational commercial law. These courts operate within broader ecosystems of regulators, elite law firms, and financial intermediaries, sustaining global hierarchies while raising fundamental questions about accountability, justice, and public legitimacy. ICCs reinforce the colonial logic of inclusive exclusion by constituting a privileged legal system that serves only the corporate citizen and wealthy individuals.

3.6 The Global Shipping Industry and Flags of Convenience

Caribbean OFCs are central to the global shipping industry, mainly through the provision of flags of convenience (Ogle 2027, Reference Ogle2024a). This practice allows ships to be registered in jurisdictions different from their owners’ countries (Ogle Reference Ogle2024a). Often, vessels registered in a flag-of-convenience jurisdiction are “owned” by shell companies equally domiciled in an OFC. Under these arrangements, ships fly the civil ensign of the flag state, subjecting them to its laws, which typically feature minimal taxation, lax labor protections, and weak safety or transparency regulations. These flag states effectively function as regulatory havens, enabling the registration of various vessels, including pleasure craft, freighters, and oil tankers, as well as offshore rigs and platforms used for oil exploration and production (Atiles and Whyte Reference Atiles and Whyte2025). By circumventing standard regulatory requirements for ship maintenance, maritime waste disposal, health and safety at work, labor laws, and taxation, these jurisdictions provide a haven for minimizing operational costs (Deneault Reference Deneault2018) and evading international laws and regulations.

Maritime flag states host most of the world’s merchant shipping fleet, with approximately three-quarters of all container ships registered in such jurisdictions. The Caribbean has the highest number of registered oil tankers, totaling 1,232, followed by Africa, which has 1,166, most of which are registered in Liberia (Atiles and Whyte Reference Atiles and Whyte2025). The environmental and governance implications of these arrangements are profound. The global shipping industry accounts for approximately 3% of greenhouse gas emissions, with ships registered under the most common flags of convenience, including those of the BVI, Bahamas, Bermuda, Cayman Islands, and Panama, contributing significantly (Ogle Reference Ogle2024a).

Open registries in Liberia, Panama, and the Marshall IslandsFootnote ⁶⁰ host over 45% of the world’s shipping fleet. Many of these registries are outsourced to private firms, often based in Singapore or the US, further diminishing regulatory accountability (Atiles and Whyte Reference Atiles and Whyte2025). For example, US-based companies headquartered in Virginia manage the Liberian and the Marshall Islands registries. In contrast, St. Kitts and Nevis’s registry operates out of the East London suburb of Romford (Ogle Reference Ogle2024a). Moreover, seventeen countries have ceded their voting rights at the UN International Maritime Organization (IMO) to private companies managing their flag registries (Ogle Reference Ogle2024a), undermining international efforts to regulate emissions and decarbonize the shipping industry.

The widespread use of flags of convenience and shadow fleets or ghost shipsFootnote ⁶¹ underscores systemic flaws in global maritime governance, exemplifying how corporate organizational structures and the use of OFCs enable capital to exploit legal and regulatory frameworks for significant advantage.

3.7 Corporate Citizenship Means Avoiding Sociopolitical Conflicts

As Atiles and Whyte (Reference Atiles and Whyte2025) argue corporate citizens and wealthy individuals frequently use Caribbean OFCs to conceal assets tied to extractive, speculative, or politically contentious activities, including mining, real estate speculation, privatization of public assets, debt-financed development, corruption, and illicit financial flows. These assets often face public scrutiny, legal challenges, or calls for redistribution. As grassroots movements contest these regimes of accumulation, OFCs provide strategic insulation from political accountability (Atiles and Whyte Reference Atiles and Whyte2025).

In this context, the veil of sovereignty offered by Caribbean OFCs becomes indispensable. These jurisdictions function as legal enclosures that obscure ownership, mask financial flows, and neutralize dissent. Corporations do not relocate assets to Caribbean jurisdictions merely to avoid taxes, but to sever capital from the geographies and communities it harms. Assets implicated in corruption, environmental destruction, and colonial extraction are strategically relocated and anonymized through secrecy tools such as trusts and shell companies, displacing the site of political struggle and depoliticizing contested wealth.

What makes these assets politically volatile is not simply their material form but their origins in colonial violence, dispossession, and imperial extraction (Atiles and Whyte Reference Atiles and Whyte2025). The corporate citizen suppresses this history by shielding ultimate beneficiaries from scrutiny, thereby muting demands for justice and redistribution. In the Caribbean, where those most affected by extractive development, climate change, and displacement are often leading resistance efforts, OFCs reinforce structural exclusion, making it nearly impossible to hold powerful actors accountable.

For instance, OFCs facilitate sanctions evasion by mirroring money laundering tactics, using front companies to obscure the origins of assets and their beneficiaries. Venezuela offers a clear example, where elites have used PR’s offshore financial services to conceal oil revenues and evade US sanctions (Atiles and Whyte Reference Atiles and Whyte2025).Footnote ⁶² As PR has evolved into an offshore hub, it has enabled illicit Venezuelan capital to access US markets through services tailored for sanctioned entities, creating new sectors that profit from unilateral US sanctions and often give rise to corporate crimes in third countries.

Caribbean OFCs, as spaces of exception structured by the logic of inclusive exclusion, constitute rarefied arenas of political containment designed to suppress popular sovereignty and thwart justice movements. Ultimately, their value lies in their ability to shield unaccountable capital from the growing global demands for transparency, redistribution, and justice.

4.1 Technologies of Dispossession: Crypto, Fintech, and the Digitalization of Offshore Finance

As this Element shows, the offshore world is not static; it evolves alongside technological innovation, international legal shifts, and changes in the global political economy. Events like the 2007–2008 financial crisis, the Panama and Pandora Papers, and civil society campaigns prompted interventions on tax havens, leading to stronger anti-money laundering regulations, tax information exchange, and compliance measures (Ylönen, Raudla, and Babic Reference Ylönen, Raudla and Babic2024). Despite these efforts, the demand for secrecy endures, highlighting persistent gaps in global tax governance and financial oversight. In response, corporate citizens and wealthy individuals have turned to new financial and technological tools to preserve secrecy and enable regulatory arbitrage.

At its core, the cryptoeconomy revolves around converting fiat currency into digital assets, driven by the speculative promise of future profits. This seemingly simple process conceals an opaque system of trading, leveraging, and synthetic token creation that amplifies volatility and systemic risk (Mackenzie Reference Mackenzie2022). Blockchain, lauded as a decentralized and tamper-proof ledger, facilitates this ecosystem (Pistor Reference Pistor2019). While originally framed as stateless and decentralized, cryptocurrencies like Bitcoin are better understood as private forms of money reliant on law and private digital infrastructures (Pistor Reference Pistor2019). While Bitcoin dominates headlines and market share, it is only one part of a sprawling ecosystem, in which thousands of altcoins have emerged, offering varying technical features and degrees of secrecy (Perkins Reference Perkins2022). Cryptocurrencies’ scarcity, volatility, and lack of intermediaries have enabled their use as a tool for wealth concealment, tax avoidance, and speculative finance.

Ethereum’s 2015 launch introduced decentralized applications, such as NFTs and smart contracts, expanding the blockchain’s utility beyond transactions to a broader ecosystem that includes stablecoins like Tether, privacy coins like Monero, and DeFi platforms that facilitate token swaps without intermediaries, exposing users to financial risks (Mackenzie Reference Mackenzie2022). Similarly, the proliferation of memecoins has intensified market speculation and tax evasion. Meanwhile, stablecoins, pegged to the US dollar, have raised regulatory concerns about systemic risks, transparency, and financial stability.Footnote ⁶⁵

Ylönen, Raudla, and Babic (Reference Ylönen, Raudla and Babic2024) observe that secrecy-seeking capital has evolved beyond traditional tax havens, leveraging financial and technological innovations that increasingly blur the distinction between onshore and offshore. Similarly, Nesvetailova and Palan (Reference Nesvetailova and Palan2019) identify several ways in which cryptoassets facilitate tax evasion: (1) crypto’s financial engineering enables complex tax-exempt transactions such as stock and gold swaps; (2) the proliferation of Initial Coin Offerings (ICOs) and Initial Token Offerings (ITOs) has created vast opportunities for fraud and evasion. ICOs, modeled after IPOs but operating in lightly regulated environments, have a dismal record – 81% were classified as scams, 6% failed, 5% went inactive, and only 8% traded on exchanges (Nesvetailova and Palan Reference Nesvetailova and Palan2019).

These dynamics have prompted growing attention within international tax law, where scholars increasingly frame cryptocurrencies as catalyzing a new generation of tax avoidance infrastructures (Avi-Yonah and Salaimi Reference Avi-Yonah and Salaimi2023; Marian Reference Marian2013, Reference Marian2020; Sanchez Reference Sanchez2017). Marian (Reference Marian2013) describes cryptocurrencies as “super tax havens,” disembedding tax avoidance infrastructures from territorial jurisdictions and replicating core offshore traits, secrecy, extraterritoriality, and nontaxation, while eliminating reliance on financial intermediaries. Furthermore, Marian (Reference Marian2020) argues that OFCs have repositioned themselves as “blockchain havens,” and documents how jurisdictions like the Cayman Islands have actively courted crypto by offering tax exemptions, regulatory incentives, and flexible incorporation regimes.

Sanchez (Reference Sanchez2017) extends this analysis by demonstrating how crypto-earnings can be generated, held, and exchanged entirely outside existing regulatory thresholds, ultimately undermining the legal enforceability of the global tax compliance regime. Sanchez (Reference Sanchez2017) also highlights increasingly complex forms of crypto tax avoidance, including crypto-equity swaps and using tax-exempt intermediaries to evade taxes without audit trails. For instance, an investor might channel stock gains into Bitcoin via a tax-exempt agent, effectively avoiding capital gains taxes while maintaining regulatory invisibility. Through P2P protocols and encrypted digital wallets, users can transfer and store wealth without disclosure obligations, thereby bypassing global enforcement mechanisms such as the OECD’s Common Reporting Standard and the US Foreign Account Tax Compliance Act (FATCA). As Harrington (Reference 87Harrington2024) argues, complexity operates as a refuge for the powerful, shielding the mechanisms of accumulation from scrutiny and contestation. Cryptoassets intensify this dynamic by introducing a technological inflection to the enduring logics of predation and extraction that underpin offshore finance.Footnote ⁶⁶

To be sure, the broader cryptoeconomy, driven by developers, exchanges, venture capital, and industry lobbyists, has actively shaped regulatory debates and has accelerated the spread of shadow banking, tax avoidance, and regulatory arbitrage. Yet, despite claims of decentralization, the sector remains deeply dependent on state intervention, tax incentives, and permissive regulatory frameworks.Footnote ⁶⁷ As this chapter shows, their success as speculative assets relies precisely on state support and regulatory leniency. Cryptoassets reinforce the central function of OFCs to shield wealth from democratic control, redistribute risk onto the public, and displace political contestation into spaces of exception. This becomes particularly clear in the constitution of crypto-special economic zones (SEZs).

The emergence of crypto-focused SEZs marks a significant shift in the global governance of digital assets. Once tied to manufacturing and export-led growth, SEZs are now reimagined to meet the needs of fintech and cryptoassets. Across the Caribbean, crypto-SEZs have emerged as spaces of exception in which the logic of inclusive exclusion enables cryptoassets to operate within limited regulatory oversight.Footnote ⁶⁸ A defining feature of crypto-SEZs is their function as regulatory sandboxes, where financial rules are suspended or significantly reduced. This echoes the SEZ’s historic role in piloting policies without formally changing national legal frameworks.

For instance, the Cayman Enterprise City (CEC),Footnote ⁶⁹ a SEZ launched in 2011, includes a dedicated blockchain and digital finance park, offering tax exemptions, minimal reporting obligations, intellectual property protections, streamlined licensing, and open-ended business visas. The Cayman Islands exemplify the emergence of a distinct crypto-island form that relies on infrastructural investment and definitional elasticity to serve cryptoassets. This model supports token issuance and decentralized ledger projects while bypassing the legal constraints of traditional jurisdictions. Furthermore, Dubai, the Maldives, Palau, and PR have sought to integrate tourism, cryptoeconomies, and SEZs or charter citiesFootnote ⁷⁰ into their developmental policies (Lynch and Munoz-Viso Reference Lynch and Munoz-Viso2024).

The development of Próspera city in Honduras’ Roatán Island vividly illustrates the emergence of crypto-SEZ. Established under the ZEDE (Zones for Employment and Economic Development) framework, Próspera operated as a libertarian “startup city” with its own tax and legal systems, adopting Bitcoin as legal tender. Backed by Silicon Valley investors, Peter Thiel and Marc Andreessen,Footnote ⁷¹ it aimed to make Roatán a blockchain hub (Simpson and Sheller Reference Simpson and Sheller2022). Later, the ZEDE was ruled unconstitutional by the Honduran courts, and it was repealed in 2022 under President Xiomara Castro’s administration, citing threats to national sovereignty and the rights of the Garifuna community. Still, Próspera’s investors launched an $11 billion investor-state arbitration claim under the Central American Free Trade Agreement, showing how corporate citizens can attempt to override democratic and environmental protections.

From Nevis,Footnote ⁷² El Salvador to Honduras, crypto-SEZs are creating spaces of exception under the banner of development, yet raising profound questions about harm, exclusion, and accountability. The following subsection examines how colonial OFCs have been reconfigured to support the offshore cryptoeconomy.

4.2 Crypto-Islands: From Financial Services to Crypto-Colonialism

Crypto-islands aims to provide a more encompassing analytical lens to the debates discussed through this chapter. Rather than treating crypto merely as a technological intensification of tax avoidance, crypto-island theorize the institutional, spatial, and ideological arrangements through which digital capitalism embeds itself within offshore structures. Crypto-islands highlight the adaptive capacity of colonial OFCs, demonstrating how these jurisdictions operate not only as sites of legal arbitrage but also as active participants in reconfiguring state–market relations to attract capital while displacing tax governance and redistribution. These dynamics are especially pronounced in Caribbean OFCs that have restructured their legal regimes to accommodate cryptoassets. While the BVI, Bermuda, and Cayman Islands follow a conventional OFC model in which these jurisdictions serve as booking centers for financial activities taking place elsewhere, PR represents a distinct manifestation in which crypto-entrepreneurs relocate to the archipelago under the guise of innovation, enacting settler-colonial logics through the financialization of territorial governance.

In this sense, the Puerto Rican case exemplifies the convergence of offshore finance, digital capitalism, and crypto-colonialism. Crypto-colonialism refers to the exploitation of land, legal regimes, and economic sovereignty under the guise of decentralization and innovation (Atiles Reference Atiles2022a). Howson (Reference Howson2020) situates it within broader dynamics of extractivism, data colonialism, and surveillance capitalism, while Crandall (Reference Crandall, Bhambra, Mayblin, Medien and Viveros-Vigoya2024) defines it as the use of blockchain and cryptocurrencies to extract land, resources, and data from vulnerable populations and territories, thereby intensifying imperial patterns of dispossession from the global South to the global North. Through mechanisms such as techno-experimentation, reliance on proprietary platforms, and the privatization of public infrastructure via distributed ledgers, crypto-colonialism embeds new digital forms of exclusion within existing colonial frameworks.

In this context, crypto-islands provide a conceptual bridge between the structural logics of offshore finance and the colonial ambitions of blockchain governance. They allow us to theorize crypto as a spatial and legal project that actualizes colonial relations through circuits of capital, code, and legal arbitrage.

4.3 Blockchain and the Future of Offshore Finance

The rise of crypto-islands reflects the diversification and adaptation of colonial OFCs and their dynamics of secrecy, regulatory arbitrage, and elite/wealth protection. Bermuda, the BVI, the Cayman Islands, and PR demonstrate how the logic of inclusive exclusion allows these crypto-islands to legally and strategically accommodate changes in secrecy demands by corporate citizens and wealthy individuals. For instance, regulatory sandboxes, principles-based licensing, and flexible definitions of financial instruments appear to promote enforcement while reinforcing systems of risk externalization and wealth shielding. Similarly, territorial legal subordination intersects with tax incentives, resulting in a regime where offshore capital can settle physically while remaining legally and financially insulated.

Together, these Caribbean OFCs show that crypto-islands are central to the post-2008 reorganization of offshore finance, which this Element identifies as a new stage in the evolution of offshore finance. Rather than displacing offshore finance, blockchain deepens its logic, embedding secrecy and regulatory arbitrage into digital systems. Far from decentralizing finance, the cryptoeconomy reinforces the structural inequalities of financial capitalism, corporate power, and colonial governance.

Understanding these dynamics requires critical international law and political-economic approaches that are attentive to how law enables enclosure and extraction in the global South. Crypto-islands emerge through the repurposing of legal tools, trusts, tax codes, regulatory waivers, and digital asset classifications that drive capital accumulation under the guise of innovation. Regulating crypto without addressing its broader legal and economic context risks reinforcing the very social harms such reforms claim to address. Ultimately, governing the cryptoeconomy demands confronting its ties to financial imperialism and colonial legality, or risk legitimizing new forms of digital colonialism disguised as regulation.

5.1 Global Tax Governance: A History of the Systemic Erasure of the Colonial World

The regulation of and the broader architecture of global tax governance have undergone significant evolution over the past century. Key institutions include the UN, the OECD, the World Bank (WB), the IMF, the G7 and G20, and, more recently, regional organizations such as the African Tax Administration Forum, the European Union (EU),Footnote ⁹⁵ and various nongovernmental organizations (Stewart Reference Stewart2025). Each actor contributes differently to the international tax system, reflecting profound geopolitical asymmetries and diverging policy priorities (Baker Reference Baker2025).

The origins of international tax governance can be traced back to the League of Nations, which, in the 1920s, commissioned studies on double taxation (Dean Reference Dean2025). The study and the works following it laid the groundwork for bilateral tax treaty networks (Christensen Reference Christensen, Seabrooke and Wigan2022; Titus Reference Titus2024). These treaties, initially designed to prevent double taxation, increasingly facilitated double nontaxation (Cobham Reference 84Cobham2024). The League’s failure to build consensus led to the development of competing models: the Mexico Model (1943), which favored source-based taxation, and the London Model (1946), which favored residence-based taxation, mirroring the divide between capital-importing and capital-exporting states (Hearson Reference Hearson2021; Stewart Reference Stewart2025; Titus Reference Titus2024). Crucially, the League adopted the “separate entity” and “arm’s-length” approaches, laying the legal foundation for transfer pricing (Ogle Reference Ogle2023), which the corporate citizens have exploited to shift profits to low-tax jurisdictions.

The postwar UN Fiscal Commission attempted to address these tensions but lacked enforcement mechanisms and institutional continuity. In contrast, the OECD has dominated international tax standards since the 1960s (Brauner Reference Brauner2025; Dean Reference Dean2025). For Dean (Reference Dean2025), the OECD’s rise as the global tax policymaker was no accident. It coincided with African decolonization and the growing influence of global South states in the UN, which threatened to democratize international economic law and global taxation. By relocating tax governance to an all-white, Euro-American institution, the US and its allies insulated policymaking from postcolonial demands (Dean Reference Dean2025). They ensured that newly independent states would remain subject to fiscal discipline rather than free to chart redistributive futures. Critical to the creation of what Dean (Reference Dean2025) calls the Global Jim Crow was the system of tax treaties developed under the OECD, which forced recently independent states into unequal arrangements with their former imperial and colonial powers (Hearson Reference Hearson2021). The OECD thus crystallized as a racially exclusive forum, what Dean (Reference Dean2025) calls a World Tax Organization in all but name, designed to reproduce imperial/racial hierarchies and exclude precisely those states most in need of equitable taxation.

In this sense, OECD’s Model Tax Convention, commentaries, and guidelines have shaped over 3,300 bilateral treaties worldwide, generally favoring residence jurisdictions, limiting withholding taxes, and constraining source-country taxing rights, deepening North–South fiscal asymmetries (Baker Reference Baker2025; Dagan and Pirlot Reference Dagan and Pirlot2025; Stewart and Nidumolu Reference Stewart, Nidumolu, Buchanan, Eslava and Pahuja2023). Hearson (Reference Hearson2021:4) describes these bilateral tax treaties as the hard law foundational to the international tax regime. “Tax treaties cover 82% of the world’s foreign direct investment (FDI) stocks, including 81% of the FDI in lower-income countries.”

To counterbalance OECD dominance, the UN introduced an alternative model treaty in 1980 and has since maintained a Committee of Experts to issue nonbinding guidance on equitable tax practices (Stewart and Nidumolu Reference Stewart, Nidumolu, Buchanan, Eslava and Pahuja2023). While not as influential globally, the UN Model offers critical tools for developing countries negotiating with capital-exporting states (Stewart and Nidumolu Reference Stewart, Nidumolu, Buchanan, Eslava and Pahuja2023).

In parallel to multilateral institutional efforts, covert state collaboration also played a significant role in the development of global tax governance. Ogle (Reference Ogle2023) documents the creation of the “Group of Four,” an intergovernmental forum established in 1970 by France, the UK, the US, and West Germany to combat international tax evasion and coordinate enforcement efforts. The group targeted transfer pricing abuses by major pharmaceutical and consumer goods multinationals, including Roche, Pfizer, and Nestlé. These investigations revealed widespread use of shell companies, tax treaty abuse, and strategic corporate structuring through jurisdictions such as Switzerland, Panama, and the Netherlands Antilles (Ogle Reference Ogle2023).

By the 1980s and 1990s, neoliberal globalization and tax competition intensified, prompting many developing countries to lower their corporate tax rates to attract mobile capital. The 1998 OECD Harmful Tax Competition Initiative (HTCI) marked a turning point, identifying preferential regimes within member states and initiating a blacklist of jurisdictions deemed noncooperative (Palan et al. Reference Palan, Murphy and Chavagneux2010; Ylönen, Raudla, and Babic Reference Ylönen, Raudla and Babic2024). The HTCI initiative sparked significant debate and scholarly attention in the early 2000s, particularly regarding its impact on small states (Sanders Reference Sanders2002; Sharman Reference Sharman2006; Vlcek Reference Vlcek2008). Sharman (Reference Sharman2006) and Vlcek (Reference Vlcek2008) demonstrate how the OECD sought to pressure OFCs to adopt a standard package of tax, financial, and banking regulations to control or prevent the race to the bottom. This initiative targeted forty-one small jurisdictions across the Caribbean and Pacific, pressuring them to overhaul their tax systems in compliance with OECD standards or face sanctions and blacklisting. Sanders (Reference Sanders2002) characterizes this intervention as a form of fiscal colonialism. Vlcek (Reference Vlcek2008) further notes that the implementation of the OECD’s agenda had adverse effects on employment and tax revenue in small Caribbean states, including the Bahamas, Dominica, St. Vincent and the Grenadines, and the Cayman Islands.

Blacklisting tax havens or noncooperative jurisdictions illustrates the failures of global tax governance (Christesen Reference Christensen2025; Maurer Reference Maurer2008). That is, while blacklisting may be effective at naming and shaming “deviant jurisdictions,” this regulatory approach has been ineffective at generating tax compliance, as it often disproportionately focuses on small, racialized states and colonial jurisdictions (Dean Reference Dean2025). Although the OECD later abandoned its list, the EU revived the practice in 2016 with the launch of the External Strategy for Effective Taxation (ESET),Footnote ⁹⁶ part of its Action Plan for Fair and Effective Corporate Taxation launched in 2017. The ESET aims to confront the global challenges posed by harmful tax competition and aggressive tax planning by coordinating anti-tax-avoidance measures across EU member states and strengthening tax agreements with third countries. On May 25, 2018, the European Commission published a blacklistFootnote ⁹⁷ in which six of seven jurisdictions were Caribbean or Pacific islands, and all were US unincorporated territoriesFootnote ⁹⁸ or BOTs.Footnote ⁹⁹ Similarly, in February 2019, the Commission adopted a list of High-Risk Third Countries with Weak Anti-Money Laundering and Terrorist Financing Regimes, which included four of the five US unincorporated territories.Footnote ¹⁰⁰

These blacklists demonstrate how many of the jurisdictions targeted are colonial territories with limited sovereign authority to regulate their broad economic activities. In practice, the strategy of blacklisting, while increasing public visibility, has reinforced double standards. British Crown Dependencies and key EU member states have remained conspicuously absent from the lists, despite their central roles in global tax avoidance (Jansky et al. Reference Jansky, Palansky and Wojcik2023).Footnote ¹⁰¹

Nonetheless, the HTCI was not the only international initiative confronting OFCs. The Financial Action Task Force (FATF),Footnote ¹⁰² established in 1989, positioned itself as an intergovernmental body responsible for developing global policies to combat money laundering (Vlcek Reference Vlcek2007), working alongside efforts by the UN Commission on Money Laundering (Sanders Reference Sanders2002). While money laundering is legally distinct from tax avoidance and evasion, the FATF’s agenda was often conflated with broader efforts to discipline OFCs under the rhetoric of financial transparency and security (Vlcek Reference Vlcek2007). In June 2000, the FATF published a list of jurisdictions deemed “non-cooperative” with its AML objectives (Vlcek Reference Vlcek2007). This list was disproportionately composed of Caribbean colonial and postcolonial states, including Antigua and Barbuda, the Bahamas, Bermuda, BVI, the Cayman Islands, Dominica, St. Kitts and Nevis, St. Lucia, and St. Vincent and the Grenadines (Vlcek Reference Vlcek2007). The FATF’s blacklist approach faced widespread criticism, and by 2002, the responsibility for conducting evaluations was transferred to the IMF (Vlcek Reference Vlcek2007). The IMF, seeking a renewed purpose in the early 2000s, conducted reviews of dozens of jurisdictions and recommended technical reforms. However, it downplayed deeper issues of transparency, information exchange, and coordination (Palan et al. Reference Palan, Murphy and Chavagneux2010).

In this context, and in the aftermath of the September 11, 2001, terrorist attacks, the US – supported by the OECD and other allied states – developed a series of national and international policies aimed at preventing terrorist financing and promoting international tax transparency (Eccleston and Gray Reference Eccleston and Gray2014; Maurer Reference Maurer2008). For instance, the USA PATRIOT Act is heavily focused on combating illicit financial flows and establishing an anti-terrorist financing framework. These policies had a direct and significant impact on Caribbean jurisdictions, which faced increased pressure from the US to implement Anti-Money Laundering and Countering the Financing of Terrorism regulations.

Subsequent measures implemented by the OECD, including tax haven blacklists (Eggenberger Reference Eggenberger2018) and the expansion of automatic tax information exchange, sought to curb secrecy-seeking capital. These efforts led to the 2003 creation of the Global Forum on Transparency and Exchange of Information and, following the 2008 financial crisis, the push for automatic exchange of information under the OECD’s Common Reporting Standard, which was adopted by nearly 100 countries (Hakelberg Reference Hakelberg2016; Ylönen, Raudla, and Babic Reference Ylönen, Raudla and Babic2024).

The 2008 global financial crisis marked a significant shift in global tax governance and broader economic governance (Christensen Reference Christensen2021, Reference Christensen, Seabrooke and Wigan2022; Christensen and Hearson Reference Christensen and Hearson2019; Eccleston and Gray Reference Eccleston and Gray2014; Rixen Reference Rixen2013; Sharman Reference Sharman2010). Notably, important was the framing of the crisis as resulting from actions carried out by hedge funds based in Caribbean OFCs (Sharman Reference Sharman2010). Under this understanding, the US and the OECD moved to impose limitations and restrictions on access by banking and financial institutions based on Caribbean OFCs.

The introduction of the Foreign Account Tax Compliance Act (FATCA) by the US in 2010 is perhaps one of the most significant unilateral actions against tax competition in the post-crisis period (Dean Reference Dean2025; Eccleston and Gray Reference Eccleston and Gray2014; Christensen and Hearson Reference Christensen and Hearson2019). FATCA requires financial institutions operating in the US to provide data on Americans’ foreign accounts or face withholding taxes and other penalties. FATCA established a de facto international standard for the exchange of tax information (Eccleston and Gray Reference Eccleston and Gray2014). FATCA also “unlocked” a path for similar multilateral systems at the EU and OECD levels, expanding the automatic exchange of tax information to cover almost 150 countries (Christensen and Hearson Reference Christensen and Hearson2019).Footnote ¹⁰³

By the 2010s, regulatory efforts expanded to corporate profit shifting, reducing reliance on traditional tax havens and forcing many secrecy jurisdictions to increase tax information sharing (Christensen and Hearson Reference Christensen and Hearson2019). However, the corporate citizen adapted by shifting toward new forms of regulatory arbitrage, particularly in onshore jurisdictions (Ylönen, Raudla, and Babic Reference Ylönen, Raudla and Babic2024). This raises broader questions about how private actors respond to international regulations and what new strategies emerge to circumvent oversight (Seabrooke and Wigan Reference Seabrooke and Wigan2022).

The OECD’s Base Erosion and Profit Shifting (BEPS) project, launched in 2013, further expanded multilateral regulatory capacity. Christensen (Reference Christensen, Seabrooke and Wigan2022) explains that BEPS introduced fifteen concrete action points aimed at comprehensive and coordinated global policy change, with a particular emphasis upon corporate tax transparency. Accordingly, the aim was to make more information available to stakeholders regarding companies’ tax affairs, including a controversial demand for an unprecedented level of transparency and geographical segmentation through so-called country-by-country reporting (Christensen Reference Christensen, Seabrooke and Wigan2022). Combining strong political backing from the G20 with the OECD’s technical expertise on tax policy, the BEPS initiative successfully produced new, globally accepted standards on corporate tax transparency by 2014 (Christense Reference Christensen2021).

Despite the proclaimed progress on international taxation, these reforms reflect technocratic solutions that struggle to address the systemic inequities entrenched in the international tax order (Christensen and Hearson Reference Christensen and Hearson2019). The continued resistance to more democratic and redistributive models suggests that, while the regulatory frameworks have evolved, the underlying power dynamics and privileges in global tax governance remain largely intact. These dynamics will become clear in the development and implementation of the OECD’s Global Minimum Tax.

5.2 OECD’s Global Minimum Tax and the Limits of International Tax Cooperation

A significant shift in global tax governance took place in 2021 with the adoption of the OECD’s Global Minimum Tax (GMT) under the Inclusive Framework on BEPS (Christensen Reference Christensen2025). Currently 137 countries have adopted the GMT, which amount to 95% of the global economy. Established in 2015 to expand participation beyond OECD members, the Inclusive Framework eventually produced a two-pillar approach: Pillar One focuses on nexus and profit allocation in the digital economy (Schoueri and Schoueri Reference Schoueri and Schoueri2025), while Pillar Two introduced a global minimum tax rate of 15% (Dagan and Pirlot Reference Dagan and Pirlot2025; Christensen Reference Christensen2025). Based on the Global Anti-Base Erosion (GLoBE) Model Rules, the GMT requires implementation through domestic legislation (Dagan and Pirlot Reference Dagan and Pirlot2025; Schoueri and Schoueri Reference Schoueri and Schoueri2025; Stewart Reference Stewart2025; Vella Reference Vella2024). The GMT aims to reconfigure both residence- and source-based taxation by requiring multinational corporations to pay a minimum effective tax rate of 15% in each jurisdiction where they operate, regardless of their headquarters location.

At the heart of Pillar Two are two interlocking mechanisms: the Income Inclusion Rule (IIR) and the Undertaxed Payments Rule (UTPR). Together, these components allow states to impose top-up taxes if income booked in a jurisdiction is not taxed at the agreed minimum rate (Christensen Reference Christensen2025). One of the most consequential shifts involves allowing countries to tax profits earned abroad by multinationals, provided the firm maintains a local subsidiary or permanent establishment (Christensen Reference Christensen2025). In practice, this aims to challenge the long-standing principle of separate-entity accounting and instead treats the multinational corporation as a singular global economic actor, mobilizing its networked liabilities – those domestic footprints created through global operations – to generate tax obligations (Christensen Reference Christensen2025).

Although Pillar Two has been widely hailed as a landmark in the fight against unfair tax competition, its implementation has proven technically complex and politically fraught. Many developing countries have raised concerns that the rules were crafted primarily for the interests of high-income countries (Titus Reference Titus2024). For example, the design of the IIR gives priority taxing rights to the parent jurisdiction of a multinational, typically a developed country, rather than to the source jurisdictions where economic activity occurs. This results in a distribution of taxing rights that systematically disadvantages developing or global South countries (Dean Reference Dean2025; Schoueri and Schoueri Reference Schoueri and Schoueri2025). Moreover, the 15% GMT has been criticized as too low to effectively stem harmful tax competition, especially given the widespread carve-outs and exceptions. Analysts have warned that these carve-outs, including those for substance-based income and refundable tax credits, may further reduce the effective tax rate, undermining the reform’s objectives (Christensen Reference Christensen2025).Footnote ¹⁰⁴

Critics contend that reforms led by the OECD continue to be structurally biased (Dean Reference Dean2025), rooted in origin-based taxation and separate-entity accounting, which facilitate corporate profit shifting (Vella Reference Vella2024). Alternatives such as unitary taxation with formulary apportionment have been suggested but face political resistance from global North states (Vella Reference Vella2024). Furthermore, dispute resolution mechanisms like the Mutual Agreement Procedure (MAP) often lack enforcement and tend to favor developed countries. Multilateral arbitration proposals remain contentious due to concerns over sovereignty (Brauner Reference Brauner2025). Despite these concerns, the G20 and more than 140 jurisdictions have committed to implementing some form of the Pillar Two rules, though legislative progress has varied widely. The EU has adopted a directive mandating implementation across member states,Footnote ¹⁰⁵ while others face domestic political obstacles.Footnote ¹⁰⁶

The US has completely withdrawn from the agreement, arguing that it violates its sovereignty. On January 20, 2025, Trump issued a memorandum entitled “The Organization for Economic Cooperation and Development (OECD) Global Tax Deal.”Footnote ¹⁰⁷ In it, Trump criticized the Joseph R. Biden administration’s support for OECD’s GMT, claiming that this and other international tax measures discriminated against US companies. With his opposition to the GMT, on February 21, 2025, Trump issued the memorandum “Defending American Companies and Innovators from Overseas Extortion and Unfair Fines and Penalties,”Footnote ¹⁰⁸ reinforcing the administration’s “America First” trade policy.Footnote ¹⁰⁹ The directive authorizes broad retaliatory tariffs against foreign governments imposing taxes or fines deemed discriminatory against US businesses, particularly targeting digital services taxes from Austria, Spain, Italy, France, Canada, and India. Accordingly, these measures unfairly burden US tech firms such as Apple, Google, and Amazon by directly taxing their revenues and allegedly transferring wealth to foreign governments and domestic competitors.

Additionally, on February 3, 2025, the US announced its withdrawal from negotiations at the UN’s Framework Convention on International Tax Cooperation (UNFCITC).Footnote ¹¹⁰ UNFCITC aims to restructure the principles of global tax governance, fostering international cooperation against tax evasion, harmful tax practices, and fairer taxing rights, issues crucial for the global South. The Trump administration emphasized that the envisioned international framework, expected to culminate in 2027, conflicted fundamentally with its national priorities and tax sovereignty (Cobham Reference Cobham2025).

Lastly, on June 28, 2025, the G7 reached a deal to exclude the US from the application of the OECD’s GMT, opting instead for a “side-by-side” arrangement whereby US companies would remain subject to existing US tax rules.Footnote ¹¹¹ The decision comes after the US threatened to impose retaliatory taxes on jurisdictions that enforce the GMT on US corporations. Although US firms remain subject to the Global Intangible Low Tax Income (GILTI) regime, which predates the OECD deal, the carve-out weakens the goal of uniform implementation and underscores the geopolitical asymmetries in global tax negotiations.Footnote ¹¹² This creates a particularly damming situation for PR and other US unincorporated territories, as discussed later.

5.3 Transnational Activism for Tax Justice and the UN’s Tax Governance

Transnational activism has emerged as a powerful counterforce in response to regulatory unevenness and institutional failure of blacklisting strategies. While multiple organizations and civil society initiatives are mobilizing for tax justice (Cobham Reference 84Cobham2024), three examples of transnational activism are the Tax Justice Network (TJN), the Independent Commission for the Reform of International Corporate Taxation (ICRICT), and the Global Alliance for Tax Justice (GATJ), which have played a pivotal role in shifting global discourse on global tax governance.

Founded in 2003, TJN emerged from grassroots activism and critical scholarship. Through public campaigns, research, and international advocacy, TJN has exposed how financial secrecy and offshore regimes perpetuate inequality, enable corruption, and erode democratic governance. It aims to influence policy through tools like the Corporate Tax Haven Index, Financial Secrecy Index (Cobham, Janský, Meinzer Reference Cobham, Janský and Meinzer2015), and the State of Tax Justice reports, and frameworks linking tax to human rights. Seabrooke and Wigan (Reference Seabrooke and Wigan2016, Reference Seabrooke and Wigan2024) emphasize the pivotal role of the TJN in exposing corporate tax secrecy through a combination of technical expertise and moral authority. Drawing on the professional backgrounds of accountants, lawyers, and economists, TJN successfully promoted country-by-country reporting as a new standard for corporate financial disclosure. Seabrooke and Wigan (Reference Seabrooke and Wigan2016, Reference Seabrooke and Wigan2024) emphasize the significance of TJN’s activist-professional networks in transforming tax justice from a technical, low-salience issue into a global political priority.

ICRICT advocates for a fundamental restructuring of international tax rules, grounded in global equity and democratic accountability.Footnote ¹¹⁵ Launched by a coalition of civil society, labor, and intergovernmental organizations, ICRICT critiques elite-controlled forums like the OECD and advocates for inclusive global governance that reflects the interests of both the global South and the North. Among ICRICT’s key proposals is the establishment of a Global Asset Registry, designed to increase transparency, facilitate wealth taxation, and enable fully informed public debates. The Registry would encompass high-value assets such as property, financial accounts, aircraft, and artworks, and apply to all legal vehicles, including trusts, companies, and foundations. Some of this data would be publicly available at the individual level, fostering accountability and reducing illicit financial flows (Cobham Reference 84Cobham2024).

The GATJ is a South-led global coalition at the forefront of the international tax justice movement.Footnote ¹¹⁶ Established in 2013, GATJ unites regional networks across five continents, representing hundreds of organizations. Rooted in a commitment to equity and democratic accountability, GATJ advocates for progressive and redistributive tax systems that counteract global and domestic inequalities and ensure sufficient public funding for essential services and human rights. Over the past decade, GATJ has led the charge in advocating for the relocation of global tax rulemaking from the OECD to the UN. As a result of the adoption of the UN Framework Convention on International Tax Cooperation (UNFCITC) in November 2023, the GATJ has been actively involved in the negotiations leading the UN Tax Convention.

Together, these activist interventions have helped to reframe global tax governance not merely as a technical fix but as a site of political struggle over sovereignty, democracy, and justice. By exposing the limitations of blacklisting and advocating for structural alternatives, they illuminate pathways toward a more just and democratic global tax order.