Tax Haven

Knowledge Center

Description of Tax Haven. Explanation.

Definition Tax Haven. Description.

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

Special Interest Group - Tax Haven Special Interest Group (34 members)

Forum - Tax Haven   In this forum you will find recent interesting discussions. Common Corporate Tax Avoidance Strategies Although tax avoidance has existed for centuries, it has inc...           Illicit Financial Flows and Tax Havens: a CSR Blindspot? (5 reactions) Although illicit* transfer flows and tax evading are often s...           Top-10 Tax Havens in the World Can somebody tell me what are the top 10 tax havens in the w...           Quotes on Tax Haven. Quotations Hi, do you know of a remarkable, humorous quote by a famous ...

Best Practices - Tax Haven Here you will find the most valuable discussions from the past.

Expert Tips - Tax Haven Here you will find high-quality advice from experts.

Resources - Tax Haven Here you will find powerpoint presentations, micro-learning videos and further information sources. Tax Dodging and Illicit Financial Flows Tax Dodging, Tax Evasion...   Tax Havens Explained Tax Dodging, Tax Evasion, Off Shore Haven, Fiscal Paradise...     News about Tax Haven         Videos about Tax Haven         Presentations about Tax Haven         Books about Tax Haven         More about Tax Haven

Compare with: Special Purpose Vehicle

Return to Management Hub: Decision-making & Valuation  |  Ethics & Responsibility  |  Finance & Investing

More on Management  |  Return to Management Dictionary  | 

This ends our Tax Haven summary and forum.