Tax haven affiliate

Tax haven affiliate

A wholly owned entity in a low-tax jurisdiction that is used to channel funds to and from a multinational's foreign operations. The tax benefits of tax haven affiliates were largely removed in the US by the Tax Reform Act of 1986.

Tax Haven Affiliate

A wholly owned subsidiary of an American corporation in a foreign tax haven. Prior to the Tax Reform Act of 1986, a corporation could avoid taxes by placing a certain amount of its income in its tax haven affiliate, but this benefit is generally no longer permissible.
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subsidiary reinsures to its tax haven affiliate, and thereby, avoids federal income tax.
Chubb CEO Praises Introduction of Legislation to Close Unfair Tax Loophole
The available evidence suggests that transfer pricing is sensitive to tax rate differences: reported pre-tax profit rates of foreign affiliates are inversely related to local tax rates; [14] royalty payments by foreign affiliates to their American parent companies are positively related to local tax rates; [15] American firms with tax haven affiliates tend to have lower U.
International Taxation
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