What is a tax haven?

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Set Up Costs Speed Set Up Accounting TAX Confidentiality
Seychelles Flag    Seychelles $ 499 1 Day No 0% High Level
Belize Flag    Belize $ 549 1-2 Days No 0% High Level
BVI Flag    BVI $ 890 2-3 Days No 0% High Level
Hong Kong Flag    Hong  Kong $ 1900 7-10 Days Yes 0% * Available to the Public
Nevis Flag    Nevis $ 999 2-3 Days No 0% High Level
Anguilla Flag    Anguilla $ 749 2-3 Days No 0% High Level
Dominica Flag    Dominica $ 799 1 Day No 0% High Level
Marshall Islands Flag    Marshall Islands $ 899 7 Days No 0% High Level

 

A tax haven is defined as a jurisdiction, country or territory that exempts foreign investors who set up bank accounts or entities within its borders from paying taxes. While citizens residing in a tax haven or companies conducting businesses there are required to pay taxes, foreign investors enjoy either total or partial tax exemption, so long as they do not conduct business operations within the tax haven territory.

Jurisdictions that establish themselves as tax havens by instituting tax policies that favor foreign investors do so with the primary objective of attracting foreign deposits that will strengthen their economy. Most best offshore jurisdiction nations are tiny territories with few natural or industrial resources. Their existence prevails thanks to the booming financial industry that grows in the shadow of foreign capital.

Tax havens are also known as offshore jurisdictions. Seychelles, Belize and BVI are a few examples. They have attracted an increasing number of foreign investors in the past few decades, primarily individuals and companies looking to escape their own countries’ tax collecting voracious institutions. In some European countries, taxes can be as high as 50% of a business’ or a person’s profit, so looking for a more favorable environment seems natural.

Tax haven jurisdictions are happy to receive the extra cash flow, but countries seeing their capital flee are not as happy as they see their tax revenue slip away. Countries seeing their tax dollars escape past their borders have tried to establish measures that either obstruct the transfer of assets to tax havens, or simply make it attractive. The new world order however, led by globalization of the economy, makes it difficult to effectively control the shift of money. What’s more, trying to impede the flow of money beyond borders goes against the claims of institutions such as the World Bank, the World Trade Organization and the Organization for Economic Cooperation and Development that support global trade liberalization.

Back in 2013, the governments of the 20 wealthiest nations in the world, made a commitment to tighten the regulations that allowed the exuberant tax evasions seen in each of their nations and territories. The main issue faced by these nations is the tight level of secrecy maintained by banking institutions in regards to customers’ financial assets.
According to a report released by the Tax Justice Network, even two years after these 20 nations’ committed to clamping down on tax evasion, people still have a wide choice of countries that will allow them to be exempted from tax payment through the use of offshore accounts. The report, titled Financial Secrecy Index by the Tax Justice Network, assessed 75 different jurisdictions around the globe that allowed billions of dollars in foreign currency to be stored in offshore accounts and found that governments worldwide lose approximately $350 billion in tax revenue each year to these offshore accounts.