While there is no agreed definition – and as such the extent of it around the world is difficult to calculate – in its simplest form, round-tripping involves an entity mediating an investment offshore which will then be brought back onshore to its country of origin. Round-tripping is often labeled by commentators and campaigners as manipulative behavior that creates no value other than providing the private sector with ways to get around legal or administrative barriers to trade and taxes.

In reality, round-tripping activities have more complex purposes than just gaining a tax advantage and round-tripping is a more value-adding behavior. For example, round-tripping may be used as a mechanism for the protection of property rights. It can also be used by individuals and businesses to access better-developed financial services and markets around the world and be used as a mechanism to leverage domestic investment with foreign investment. For example, Country A would like a foreign investment to match its current financing for a domestic project. Country B would like to match this investment but in a safe, neutral jurisdiction. Country A and Country B put their investments in a vehicle such as a Business Company to effect this.

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