Two countries — Luxembourg and the Netherlands — alone host nearly half of these investments, according to the report.

The VI, along with its fellow international financial centres of Hong Kong, Bermuda, Singapore, the Cayman Islands, Switzerland, Ireland and Mauritius, round out the list.

The report defines “phantom investments” as foreign direct investment that brings no “capital in service of productivity gains.”

Although FDI amounts to $40 trillion annually worldwide, according to the report, “much of it is phantom in nature — investments that pass through empty corporate shells [that] have no real business activities. Rather, they carry out holding activities, conduct intrafirm financing, or manage intangible assets — often to minimise multinationals’ global tax bill.”

Some of the 10 countries on the list have corporate tax rates as low as 0 percent, as in the VI.

Data sources

Using FDI data from the Organisation for Economic Cooperation and Development with the global coverage of the IMF’s Coordinated Direct Investment Survey, the report attempts to create what it calls a “global FDI network.”

Its goal is to map all “bilateral investment relationships” and determine real FDI from “phantom” FDI, which the report found now makes up nearly 40 percent of all FDI worldwide, up from a mere 30 percent a decade ago.

A different study conducted last year by the IMF found that “phantom” FDI was growing faster than the world economy itself since the financial crisis.

“Despite targeted international attempts to curb tax avoidance — most notably the G20 Base Erosion and Profit Shifting initiative and the automatic exchange of bank account information within the Common Reporting Standard (CRS) — phantom FDI keeps soaring,” the report’s authors wrote.

In the VI

The VI abides by the Common Reporting Standard and is a member of the OECD’s Inclusive Framework on BEPS, and has long contended that the transactions it facilitates result in a net benefit to the global economy.

IFCs facilitated $1.6 trillion of financing to developing countries between 2007 and 2014, according to a BVI Finance-commissioned report by the Overseas Development Institute, an independent London-based think tank, which also found that financing galvanised through IFCs boosted developing countries’ gross domestic product by $400 billion and tax revenues by $100 billion during the 2007-2014 period.

However, the IMF contends that better data is needed to keep up with today’s “financial engineering.”

“Today, a multinational company can … shift large sums of money across the globe, easily relocate highly profitable intangible assets, or sell digital services from tax havens without having a physical presence,” the authors wrote. “The new global FDI network is useful to identify which economies host phantom investments and their counterparts, and it gives a clearer understanding of globalisation patterns.”