These tax integrity issues are of present and pressing global concern. While these issues adversely affect both developed and developing countries, the effect of lost tax revenues on developing countries in Asia is comparatively more severe.
In the context of ADB’s nonsovereign operations, tax integrity issues may arise whether the shareholding structure is located onshore (where the project is located) or offshore (in another jurisdiction). Tax integrity issues arise primarily (though not exclusively) through the use of offshore jurisdictions and cross-border structures. ADB acknowledges that there are numerous legitimate reasons for the use of structures involving offshore jurisdictions, including tax optimization to eliminate double taxation on income and profits as well as other operational, management, and administrative efficiencies and flexibility, especially where structures involve multiple international investors in numerous jurisdictions. However, ADB also recognizes that offshore structures may pose higher risks because these structures have greater potential to obscure beneficial ownership and sources of funds, and thereby more easily facilitate corruption, tax evasion, money laundering, financing of terrorism, and other illicit purposes.
This document is being disclosed to the public prior to its consideration by ADB’s Board of Directors in accordance with ADB’s Public Communications Policy 2011.