Factors Impacting Offshore Company Activities after the EU Enlargement

Abstract

The article deals with the offshore centre activities inthe European Union economic area and their role in theinternational trade. The offshore centre activities areanalyzed taking into account the offshore companies registeredin the former colonies of the European Unionmember-states. The changes in activities of the offshorecompanies registered on the territory of the EuropeanUnion are examined within the context of the EuropeanUnion enlargement.There is no clearly and officially stated position ofthe European Union governing bodies on the offshorecentres and on the real assumptions on their process developmentnon-conformities.The new European Union member-states have had tolimit the activities of the offshore centres that were establishedon their territories including Cyprus, Malta, Hungaryand others. It should be noted that the offshore centrein Cyprus had been very popular among Russian businessmenuntil Cyprus became a member of the EuropeanUnion. In spite of that, some of the European Union member-states have preserved the opportunity to use offshorecentres that were established on the non-European Unionterritories. Both in Lithuania and Latvia, the offshore centresthat are registered in various states of the USA likeDelaware, Wyoming, Kentucky, are still very popular. Accordingto the Lithuanian legal acts, these offshore centresare not considered to be the territories where the tax ratesare lower than in Lithuania and the tax tariff of 29 per centis not applicable to them. The rapid development of the USoperating offshore centres has been observed by other authorswho claim that the majority of the offshore companieswere registered in the Caribbean Sea region and theWestern European states. Alongside these regions, the offshorejurisdiction zone has been expanding in the states ofthe Asia/Pacific region.Objective of the article – analyze factors impactingthe activities of the offshore centres after the enlargementof the European Union.Although the official position of the European Uniontowards offshore centres and their activity is negative,some states of the European Union establish offshorecentres in their territories. Being the members of the EUstates, Lithuania businessmen enjoy favourable conditionsto carry out their activities through the offshorecentres registered in the USA. Having analyzed the entrancetime of various states into the OECD organization,the conclusion may be drawn: new members are acceptedto this organization paying no attention to the factwhether the state has already established the offshorecentre in its territory or not before joining the OECDorganization. Among offshore centres, that are to undergosanctions, there are states that do not belong to theOrganization of Economic Development and Cooperation.Furthermore, this is acts as the mean to reducecompetition among offshore centres.