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 ?
taxes if it tried to bring the money back to the United States from its three overseas tax havens, the study said.
2billion over six years, with more than PS48billion of assets stashed in tax havens.
htm) ActionAid Calls for Tax Haven Crackdown at G8 [VIDEO]
Shaxson reveals that one third of total global assets are held in tax havens and over half of world trade passes through them.
Though the extent to which Turkish companies were participating in offshore banking remained fuzzy before Monday's report, which was one of the most comprehensive yet on assets stored in tax havens, Ankara in recent years has launched campaigns to crack down on off-shoring in recent years.
It also explains how the current regulatory framework is inadequate and sets forth reasons why the Stop Tax Haven Abuse Act will do little to remedy these shortcomings.
Idyllic: Grand Cayman, left, is typical image of a tax haven but is now being challenged by London, below
Two relatively new offshore tax havens, Singapore and Hong Kong, have also now agreed to adopt the Organisation for Economic Cooperation and Development (OECD) standards in line with the request from the G20.
Rifts between the Americans and the Europeans on how to tackle the financial crisis may have been apparent in the meeting of G-20 finance ministers yesterday in the UK but on tax havens there is no disagreement.
Since subsidiaries may be established in listed jurisdictions for a variety of nontax business reasons, the existence of a subsidiary in a jurisdiction listed as a tax haven or financial privacy jurisdiction does not signify that a corporation or federal contractor established that subsidiary for the purpose of reducing its tax burden.
BANKS which have received Government help to deal with the financial crisis should be made to reveal full details of their tax haven activities, union leaders urged today.