tax haven

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Related to Tax havens: Tax Haven Countries

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 ?
The study, by two left-leaning non-profit groups, found that nearly three-quarters of the firms on the Fortune 500 list of biggest American companies by gross revenue operate tax haven subsidiaries in countries like Bermuda, Ireland, Luxembourg and the Netherlands.
The report says: "Luxembourg has become the tax haven of choice for Wal-Mart and other multinationals.
SIT is expected to soon send a report to the government in this regard with a request to ink MLATs with tax haven nations and all other jurisdictions important from the point of financial and tax evasion investigations, sources privy to the development said.
Many offshore tax havens have also agreed to sign up to the Multilateral Convention on Mutual Assistance in Tax Matters a data sharing initiative led by the OECD.
We know that tax havens mean people in the UK are suffering because the UK is losing so much money to them, but even worse poor countries across the world are losing huge amounts of money.
Wealth management companies in offshore tax havens have to increasingly highlight the wealth management proficiencies that they have built over a period of time rather than highlighting confidentiality of tax information.
European leaders have absolutely no excuse not to act when you see what proportion of this money is stashed right under their noses in tax havens for which they are responsible," said Alonso.
I will not hesitate to consider any country that refuses to fully cooperate with France as a tax haven," he said.
Legally people can move assets and finances to a different jurisdiction such as tax havens and pay less tax.
Nicholas Shaxson's expose of tax havens in his book Treasure Islands was mentioned and I confess to buying a copy from a well known mail order company that avoids UK tax by pretending to be based in Luxembourg.
Very recently, investigations have shown that at least 68 MPs and members of the House of Lords are either directors or nonexecutive directors of firms linked to tax havens.
CELEBRITIES and corporations are using offshore trusts, tax havens or wives and civil partners to avoid paying their fair share of tax, according to a new study.