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 ?
Moving to a tax haven is less like picking a spot on the map and more like balancing a delicate equation.
The network wants governments of Kenya and other African Governments to review the old and outdated DTAAs particularly with tax havens and ensure that those currently under negotiation do not undermine domestic resource mobilisation efforts.
The tax havens are growing courtesy of business process outsourcing (BPO) companies (usually call centers) and online gambling firms.
ISLAMABAD -- Pakistan has been unable to get much cooperation from 11 countries known as tax havens around the world to share information on offshore wealth amid a global clampdown on tax evasion.
A key way for MNEs to transfer money to tax havens is transfer mispricing.
The old adage of "Follow the money" becomes more complicated when it comes to tax havens because people use tax havens to thwart those who are trying to do just that.
On Tuesday, the EU published the list of 17 non-EU tax havens, including the UAE and Bahrain.
So how can it be that South Korea, a member of the OECD, is now considered a tax haven? When contacted by DW, the organization said it did not want to comment yet.
The researchers explore the implications of tax haven wealth for measuring wealth inequality.
Additionally, a number of states have recently adopted "tax haven" legislation that allows for the inclusion in the state-taxable base of foreign source income earned by non-U.S.
However, the general public harbors deep-rooted suspicions that "a small number of the rich as well as big business are using tax havens to benefit improperly." The tax haven issue is particularly prone to serve as the catalyst for an increase in public suspicion regarding the fairness of the tax burden in many countries against the background of growing income disparities.
Both tax evasion and tax avoidance, whether via an offshore tax haven or an anonymous establishment, undermine a tax system's ability to meet its three most important goals: (i) revenue generation; (ii) fair distribution of tax services burden across tax payers though not equally; and (iii) promote growth and equity.