Tax Haven

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What is a Tax Haven? Meaning.

A corporate Tax Haven is a country or region that has a friendly tax regime or even imposes no tax at all. The Cayman Islands, Bermuda, Luxembourg and Switzerland are well known examples.

On top of their low tax burden, these countries usually also offer less regulation and lots of privacy. Companies often form one or more special legal entities such as a trust, an offshore company, or a foundation in the tax avoidance process.

Tax Haven Types

In fact, tax havens are by no means similar. Rather they can differ on many dimensions such as political, economic or geographical dimensions. Orlov (2004) makes a division that is based on the attitude towards tax regulations; on how conducive these tax haven jurisdictions are towards their responsibilities. He distinguishes the following broad groups of tax havens:

1. Quality Tax Havens: These jurisdictions are characterized by legal policies and regulations supported by rules and laws and subsequent supervision of banks. Because of this, these countries attract prudent organizations and the best deals. These tax havens are often political stable and well-developed which also is beneficial for attracting companies (although some developing countries are included as well). Switzerland, UK, Monaco and Hong Kong are examples.
2. Other Tax Havens: This group is not able to compete with the first group because of the fact that they lack many of the benefits that quality tax havens have. Therefore they are required to lower legal regulations and supervisions. Most of the countries in this group are developing countries. Examples of this group are Liberia and Nauru.

Source: Orlov, M. (2004) “The Concept of Tax Haven: A Legal Analysis” Intertax Vol. 32 Iss. 2 pp. 95-111

Forum Forum about Tax Havens. Below you can ask a question about this topic, share your experiences, report a new development, or explain something. Start a new topic about Tax Havens Share your knowledge here (or ask a question)   🔥 NEW Common Corporate Tax Avoidance Strategies Although tax avoidance has existed for centuries, it has increased considerably in recent decades due to the increasing international mobility of capital. Due to Panama papers, tax avoidance practices... 5   Illicit Financial Flows and Tax Havens: a CSR Blindspot? Although illicit* transfer flows and tax evading are often seen as a problem resulting from corruption in developing countries, it is mainly a political and legal problem that needs to be addressed by... 3   5 comments Top-10 Tax Havens in the World Can somebody tell me what are the top 10 tax havens in the world? What is their speciality? And how do they benefit from the parking of illegal funds?... 2   Quotes on Tax Haven. Quotations Hi, do you know of a remarkable, humorous quote by a famous person or a proverb related to tax haven? Please enter a reaction to share it for other people to enjoy! Please use this template: Aut... 2

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