Abstract

Purpose – to assess possible consequences of the employment of offshore companies in strategic state projects. Research methodology – empirical research statistical data analysis. This publication introduces scientific research on the case of employment of offshore companies in strategic state projects and assesses its possible damage to state budget revenue. Findings – offshore financial centres specialise in serving particular economic sectors. Research limitations – although developed countries suffer the most significant tax revenue losses, they promote the establishment of offshore centres. Countries do not learn from their mistakes, especially in terms of tax evasion through offshore companies. Practical implications – by employing offshore companies in its strategic projects, Lithuania supports the double stand-ards and the principle that what the state is allowed to do, private business is not. By taking advantage of offshore companies, corruption offences can be financed. Originality/Value – this article introduces the new empirical research on employment of offshore companies in strategic state projects.

Highlights

  • One of the functions of a state is to set business rules, mandatory to all market participants

  • Countries do not learn from their mistakes, especially in terms of tax evasion through offshore companies

  • This proposes that by implementing its national-level strategic projects through offshore companies, Lithuania promotes offshoring in business and supports the double standards for the offshoring companies employed by the state and the ones operating in the private sector

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Summary

Introduction

One of the functions of a state is to set business rules, mandatory to all market participants. The large interests that state governors and businesses have in offshore companies were confirmed by the Panama Papers scandal which revealed the existence of 214000 offshore companies in more than 200 states and their territories (Internal Revenue Service Estimates, 2016). The conduct of such businesses helps to cover the processes of money laundering. A total of 2.6 terabytes of the confidential information, i.e. 11.5 million documents, was publically announced This amount of data was higher than that leaked over the scandals taken together. The PANA committee warns that it is just the tip of an iceberg since the company Mossack Fonseca, which occupies only 5–10 per cent of the secret overseas

Global situation
The impact of the Panama Papers on EU member states
Lithuania’s participation in the activities of offshore companies
Findings
Conclusions
Full Text
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