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Concept
Tax haven
Summary
A tax haven is a term, sometimes used negatively and for political reasons, to describe a place with very low tax rates for non-domiciled investors, even if the official rates may be higher.
In some older definitions, a tax haven also offers financial secrecy. However, while countries with high levels of secrecy but also high rates of taxation, most notably the United States and Germany in the Financial Secrecy Index ("FSI") rankings, can be featured in some tax haven lists, they are often omitted from lists for political reasons or through lack of subject matter knowledge. In contrast, countries with lower levels of secrecy but also low "effective" rates of taxation, most notably Ireland in the FSI rankings, appear in most . The media consensus on effective tax rates poured by certain academics and politicians is that the term "tax haven" and "offshore financial centre" are almost synonymous. In reality, many offshore financial centers do not have harmful tax practices and are at the forefront among financial centers regarding AML practices and international tax reporting.
Jurisdictions that were formerly known as tax havens, like Jersey, are open about zero rates of taxation, known more accurately as tax neutrality. Some such OFCs have limited bilateral tax treaties, however the connotations associated with this may be misleading, as the consequence is that full tax set by the relevant jurisdictions receiving the proceeds from these OFCs is payable there. They now operate with high levels of OECD compliance.
Modern corporate tax havens have non-zero "headline" rates of taxation, may also high levels of OECD compliance, and have large networks of bilateral tax treaties. However, their base erosion and profit shifting ("BEPS") tools enable corporates to achieve "effective" tax rates closer to zero, not just in the haven but in all countries with which the haven has tax treaties; sometimes putting them on tax haven lists. According to modern studies, the include corporate-focused havens like the Netherlands, Singapore, Ireland, and the U.
Official source
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