tax haven

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Tax haven

A nation with a moderate level of taxation and/or liberal tax incentives for undertaking specific activities such as exporting or investing.

Tax Haven

A country that has a low tax liability compared to other countries or no taxes at all. Some countries deliberately set themselves up as tax havens in order to encourage international corporations to register themselves there. Some countries that are not tax havens have loopholes in their tax codes in order to allow certain persons and companies to place some of their assets in an account in a tax haven.

tax haven

A country or other political entity that offers outside businesses and individuals a climate of minimal or nonexistent taxation. In some cases, the low taxes apply not only to those levied by the tax haven itself but also to the possibility of reducing or avoiding taxes levied in the investor's home country.

tax haven

a country which imposes low rates of personal and corporate TAXES, and which as a consequence tends to attract wealthy individuals, MULTINATIONAL ENTERPRISES and FINANCIAL INSTITUTIONS seeking to minimize their taxation liabilities. At the present time, countries operating low-taxation systems include Bermuda, Jersey and the Cayman Islands. An OECD report published in 2000 listed 35 ‘offshore financial centres’ which it classed as ‘tax havens that harm trade and investment’. The OECD defined harmful jurisdictions as those that offered zero or low tax rates but fell short in legal and administrative transparency. The latter factor makes it difficult for other countries ‘tax authorities’ to detect and observe the complex financial transactions undertaken by criminals and MNEs (MULTINATIONAL ENTERPRISES) to ‘hide’ their tax liabilities.

There are two main types of tax haven arrangements:

  1. tax exempt companies beneficially owned by non-residents of a country which pay a small annual administration fee (under £2000) in return for being exempt from income and withholding taxes; there are no capital gains or inheritance taxes. Tax haven countries themselves ‘gain’ from the creation of local employment and the extra income this creates, often in an impoverished country or a country lacking other resources (e.g. the Channel Islands and the Isle of Man);
  2. international business companies that are ‘accommodated’ by ‘designer’ taxation, whereby tax havens ‘tailor’ rates of tax to help individual MNEs to minimize their ‘onshore’ tax liability. MNEs negotiate low tax rates which in turn allows them to meet thresholds for tax exemptions in onshore jurisdictions. See also TRANSFER PRICE, MIXER COMPANY, MONEY LAUNDERING.

tax haven

a country that imposes low rates of personal and corporate TAXES, and as a consequence tends to attract wealthy individuals and MULTINATIONAL COMPANIES seeking to minimize their taxation liabilities. See MIXER COMPANY. See also TRANSFER PRICE.
References in periodicals archive ?
Ever increasing taxes and social contributions make low tax jurisdictions like Bulgaria a more and more attractive country," Alexander Schinzing, Corporate Counsel of English tax and law office ETC, who deals with UK and German business, told Novinite.com.
As more of the world establishes tax havens, low tax jurisdictions and tax treaties, there are increasing opportunities for people to shift profits from high-tax jurisdictions--like Canada -- to other jurisdictions in order to avoid paying taxes.
* Cities are in a fiscal crisis with the public reaction to changes in property and business tax reassessment, income insensitive property and business taxes, and urban flight as the middle class and industries flee to low tax jurisdictions on the periphery of the City.
He proposes a tax of 10 per cent on betting firms as ideal to stem the likelihood of the affected entities closing shop in Kenya and moving elsewhere."Betting is online and technology-based and firms can move to low tax jurisdictions like Malta and Gibraltar and still operate from Kenya.
The technical sessions in the seminar will deliberate on topics, such as, loan and equity capital and investment flows in BRICS, portfolio investment and capital flows from low tax jurisdictions. Senior officials from SEBI, CBDT, DIPP will be in the panels for these technical sessions along with senior representatives from Government of Brazil, Bank of International Settlement, HSBC India, Standard Chartered Bank, India, Deutsche Bank AG, India.
More enquiries have been initiated into accounts reportedly held by Indian entities in no tax or low tax jurisdictions, he said.
The publication of a consultation paper confirms HMRC has set up a specialist team to deal with "complex and high risk" transactions - which include companies engaging in tax planning by locating operations in "low tax jurisdictions".
The minister observed that the structure and location of the group entities of the multinational enterprises exploit the favourable tax regime offered by the low tax jurisdictions and tax havens.