A tax haven is defined as a jurisdiction with very low "effective" tax rates ("headline" rates may be higher). In some traditional definitions, tax haven also offers a degree of secrecy. However, even though jurisdictions with high levels of confidentiality but also high taxation rates (eg US and Germany in the Financial Secrets Index rating), may be shown in some tax haven listings, they are not universally regarded as shelter. In contrast, jurisdictions with low levels of confidentiality but also low "effective" taxation rates (eg Ireland, and Britain in FSI rankings), appear on many tax haven lists. (See Ã,§ Tax haven list).
Tax-exempt is open about having nearly zero taxation levels (eg Cayman Islands, Bermuda, BVI, Jersey and Isle of Man), and therefore is likely to have limited bilateral tax treaties. In contrast, modern
The use of tax havens, whether traditional or corporate, indicates the loss of tax income tax to jurisdictions that are not tax havens. Estimated tax scales are missing but the most credible have a range of $ 100-200 billion per year. In addition, the capital kept in tax havens may permanently abandon the tax base (basic erosion). Estimates of capital held in tax havens also vary with the most credible estimates of $ 7-10 trillion (up to 10% of global assets). The use of both traditional and corporate tax hazards has been noted in developing countries, such as Africa, who most need tax revenues to build their economies.
About 15% of tax havens countries. Taxable property is largely a successful economy and heaven has brought prosperity to jurisdiction. Top 15 top-GDP per capita jurisdiction, excluding oil & amp; gas states, are smaller to medium-sized havens. Because GDP increases are artificial (due to accounting flows), havens tend to be over-leveraged (international capital misprices of artificial debt-to-GDP). This can lead to a severe credit cycle and/or property/banking crisis when international capital flows are overhauled. Irish celtic tiger and subsequent financial crisis in 2009-13, is an example. Jersey is another.
The focus on eradicating tax havens (eg projects led by the OECD-IMF) is largely in the areas of common standards, transparency and data sharing. However, the emergence of corporate taxes that comply with the OECD, which is now responsible for the largely quantum of tax revenues lost from basic erosion and earnings shift (or BEPS) activities, has led to criticisms of this focus, versus net taxes paid. Higher tax jurisdictions, such as the United States and the EU-28, depart from the OCED BEPS Project in 2017-18, to introduce tax regimes targeted to limit the corporate tax haven (eg the GILTI and BEAT tax regime, and the proposed UE-28 regime Digital Service Tax). Unlike the OECD-IMF compliance approach, the new regime is focused on increasing the net tax paid by companies in the corporate tax haven.
Video Tax haven
Definition
There are several definitions of tax havens. In 2002 The Economist adopted a description by Geoffrey Colin Powell (former economic advisor for Jersey): "What... identifies an area as a tax haven is the existence of a jointly created intentional tax structure to take advantage of , and exploit, the world's demand for opportunities to engage in tax evasion. " The Economist shows that this definition will still exclude a number of jurisdictions traditionally regarded as tax havens. Similarly, an Australian journalist suggests that any country that modifies its tax legislation to attract foreign capital can be considered a tax haven.
According to another definition, the main feature of heaven is that laws and other actions can be used to avoid or avoid tax laws or regulations from other jurisdictions. The US Government Accountability Office in its December 2008 report on the use of tax havens by American corporations, could not find a satisfactory definition of tax haven but regarded the following characteristics as an indication of that: no or nominal tax; lack of effective exchange of tax information with foreign tax authorities; lack of transparency in the operation of legislative, legal or administrative provisions; there is no requirement for a substantive local presence; and self-promotion as an offshore financial center.
In February 2008 the Organization for Economic Cooperation and Development (OECD) identified three key factors in considering whether jurisdiction is a tax haven:
- There is no or only nominal tax - Havens taxes impose no or only nominal taxes (generally or in special circumstances) and volunteer, or supposedly offer, as a place to be used by non-residents to escape high taxes in their country of residence.
- Protection of personal finance information - Tax havens usually have laws or administrative practices in which businesses and individuals can benefit from strict rules and other protections against oversight by foreign tax authorities. This prevents the transmission of information about taxpayers who benefit from low tax jurisdictions.
- Lack of transparency - Lack of transparency in the operation of legislative, legal or administrative provisions is another factor used to identify tax havens. The OECD is concerned that the law should be applied in an open and consistent manner, and the information required by the foreign tax authorities to determine the situation of taxpayers is available. The lack of transparency in one country can make it difficult, if not impossible, for other tax authorities to apply their laws effectively. 'Secret decisions', negotiated tax rates, or other practices that fail to apply the law openly and consistently are examples of the lack of transparency. Limited supervision oversight or lack of government legal access to financial records are contributing factors.
However, the OECD finds that its definition captures certain aspects of its member tax system (some countries have low or zero taxes and ring fences for certain preferred groups). Future work focuses on a single aspect of information exchange. This is generally regarded as an inadequate definition of tax haven, but politically, because it includes tax haven havens (with little power in the international political arena) but liberates powerful countries with tax haven aspects like the US and UK.
In deciding whether a jurisdiction is a tax haven, the first factor to look at is whether there is no or nominal tax. If this is the case, two other factors - whether there is an exchange of information and transparency - should be analyzed. Not having or a nominal tax is not enough, by itself, to characterize jurisdiction as a tax haven. The OECD recognizes that each jurisdiction has the right to determine whether to impose direct taxes and, if so, to determine appropriate tax rates.
Maps Tax haven
Financial effects
Capital held offshore
Although incomplete, and with the limitations discussed below, the available statistics continue to show that overseas banking is a huge undertaking. The OECD estimates in 2007 that overseas-held capital accounts for between $ 5 trillion and $ 7 trillion, making up about 6-8% of total managed global investment.
A more recent study by Gabriel Zucman from the London School of Economics estimates the amount of global cross-border property held in tax havens (including Holland and Luxembourg as tax haven for this purpose) of US $ 7.6 trillion, of which US $ 2.46 trillion is detained in Switzerland itself. The Tax Justice Network estimates in 2012 that overseas-held capital accounts for between $ 21 trillion and $ 32 trillion (between 24-32% of total global investment), although the forecast has been challenged.
In 2000, the International Monetary Fund was calculated based on Bank for International Settlements data that for selected offshore financial centers, cross-border assets on the balance sheet held in overseas financial centers reached $ 4.6 trillion by the end of June 1999 (approximately 50 percent of total cross-border assets). Of that amount, $ 4.6 trillion, $ 0.9 trillion was held in the Caribbean, $ 1 trillion in Asia, and most of the remaining $ 2.7 trillion was recorded by the international financial center (IFC), London, IBF AS, and overseas markets of Japan. The US Treasury Department estimates that in 2011, the Caribbean Banking Center, which covers the Bahamas, Bermuda, Cayman Islands, Netherlands Antilles and Panama, saves nearly $ 2 trillion dollars in US debt. Of this amount, approximately US $ 1.4 trillion is expected to be held in the Cayman Islands alone.
The Wall Street Journal in a study of 60 large US companies found that they deposited $ 166 billion in offshore accounts in 2012, accommodating more than 40% of their profits from US taxes. Similarly, Desai, Foley and Hines in the Journal of Public Economics found that: "In 1999, 59% of US companies with significant overseas operations had affiliates in tax haven countries", although they does not define "significant" for this purpose. In 2009, the US Government Accountability Office (GAO) reported that 83 of the 100 largest publicly traded US companies and 63 of the 100 largest contractors for the US federal government retained subsidiaries in countries generally considered havens to avoid taxes. GAO does not review corporate transactions to independently verify that subsidiaries help companies reduce their tax burden, but merely says that historically the objective of the subsidiary is to cut tax costs.
James Henry, former chief economist at consultant McKinsey & amp; The company, in its report for the Tax Court Network, gives an indication of the amount of money sheltered by wealthy people in tax haven. The report conservatively estimates that the $ 21 trillion worth is held in offshore accounts with $ 9.8 trillion alone by the top rate - less than 100,000 people - each with a financial asset of $ 30 million or more. The report's authors point out that this hidden money generates "big" income taxes that are missing - a "black hole" in the economy - and many countries will become creditor instead of being debtors if the money from their tax evaders will be taxed.
Missing tax revenue
The Tax Justice Network estimates in 2012 that the global tax revenue lost to tax haven is about $ 190 to $ 255 billion per year (assuming 3% capital gains, 30% capital gains tax, and $ 21 to $ 32 trillion hidden in tax havens.The Zucman study used a different methodology, but also estimated $ 190 billion in lost revenue.
The UN Economic Commission for Africa estimates that illegal financial flows cost about $ 50 billion annually. The OECD estimates that two-thirds ($ 30 billion) happens from tax evasion and avoidance from non-African companies. Tax evasion by international corporations through legal and illegal methods impedes development in African countries. The goal of sustainable development (SDGs) will be difficult to obtain if these losses persist.
By 2016, massive data leakage known as "Panama Papers" raises doubts about the size of previous lost revenue forecasts.
However, the tax policy director of the Chartered Institute of Taxation expressed skepticism over the accuracy of the figures. If true, that number would amount to about 5 to 8 times the total amount of currency currently circulating in the world. Daniel J. Mitchell of the Cato Institute says that the report also assumes, when considering a notionally lost income tax, that 100% of the money deposited offshore is avoiding tax payments.
In October 2009, research commissioned from Deloitte for the UK Offshore Financial Center Overview said that much less tax has been lost to tax havens than previously thought. The report indicated, "We estimate the total tax on UK firms that are potentially lost due to evasion activities to up to 2 billion pounds per year, although that could be much lower." An earlier report by the US Trade Union Congress concluded that tax evasion by the 50 largest companies in the FTSE 100 deprived the UK Treasury of about Ã, Â £ 11.8 billion. The report also stressed that the British Crown Dependency made a "significant contribution to UK market liquidity". In the second quarter of 2009, they provided net funds to banks in the UK of $ 323 billion (£ 195 billion), of which $ 218 billion came from Jersey, $ 74 billion from Guernsey and $ 40 billion from the Isle of Man.
The Justice Justice Network reports that the system is "basically designed and operated" by a group of high-paying specialists from the world's largest private bank (led by UBS, Credit Suisse and Goldman Sachs), law firms, and accounting firms and tolerated by the organization such as the International Bank for International Settlements, International Monetary Fund, World Bank, OECD and G20. The amount of money hidden has increased significantly since 2005, which sharpens the divide between the super rich and the rest of the world.
List of tax haven
List type
Three main types of tax haven lists have been produced to date:
In addition to the above list, commentators highlight specific proxy indicators, the two most notable ones are:
The combined list generally amounts to at least 29 non-trivial global jurisdictions (ie 5 channels and 24 sinks), which comprise just under 15% of the world's recognized jurisdictions.
10 best tax havens
In terms of scale, the following ten continue to recur in the top 10 tax haven list, and in particular all lists are ranked by scale (i.e. quantitative list):
- The four modern corporate tax havens (have a "non-zero" headline tax rate and require "substance"/job taxes, leading to a very wide network of tax treaties):
- Ireland
- The Netherlands
- United Kingdom
- Singapore
- Three general tax havens (have a non-zero tax rate "headline" but offer some type of traditional tax-service tax, leading to limited bilateral tax treaties):
- Switzerland
- Luxembourg
- Hong Kong
- Three very traditional tax-free places (open to zero-tax status and no requirement for employment/"substance" tax, and thus have limited tax treaty):
- Bermuda
- Cayman Islands
- British Virgin Islands
Notice the following in connection with this list:
Main 20 tax havens
Sovereign jurisdiction as the company's main tax assets, and the main traditional tax occupations, include:
- Switzerland - either the ultimate traditional tax haven (or sink ofc), and the big corporate tax haven (or ofc channel), and is strongly linked to the mainstream sink of Jersey.
- Luxembourg - one of the largest sinking sinks in the world (the terminals for many tax havens, mainly Ireland and the Netherlands).
- Hong Kong - "Luxembourg Asia", and almost as big as the sink as Luxembourg; tied to the largest corporate tax haven APAC, Singapore.
Sovereign jurisdictions that are key features of corporate tax havens are:
- Ireland - a large corporate tax haven, and ranked by Gabriel Zucman as the 28th largest EU corporation; leader in IP-based BEPS tools (eg double Irish), but also Debt-based BEPS tools.
- The Netherlands - a major corporate tax haven, and the largest channel of tax havens through IP-based BEPS tools (eg Dutch Sandwich); traditional leaders in debt-based BEPS tools.
- Great Britain - After restructuring their tax code in 2009-13 (see "transformation"), it became a big corporate tax haven; the smallest tax haven is used, or currently, depending on the UK.
- Singapore - Asia's largest corporate tax haven (APAC headquarters for most US technology companies), and the main channel for Asia's largest offshore Asia, Hong Kong and Taiwan offices.
Sovereign (semi-sovereign) jurisdictions that feature primarily as traditional tax havens (but have non-zero tax rates), including:
- Malta - an emerging tax haven in the European Union, which has become a source of wider media oversight.
- Cyprus - damaged its reputation during the financial crisis when the Cyprus banking system nearly collapsed, but reappeared in the top 10 list.
- Taiwan - the main traditional tax haven for APAC, and described by the Tax Justice Network as "Switzerland" Asia.
Sub-national jurisdictions which are very traditional tax havens (ie 0% explicit tax rate), including (a more complete list in opposite tables):
- Jersey (UK), still the ultimate traditional tax haven and deeply connected with Swiss channels; financial stability issues.
- Isle of Man (UK), "tax haven that failed"
- Outer Territories of Great Britain, see opposite table, where 18 of 24 sink ofcs, are current or previous, English dependencies:
- The British Virgin Islands, the largest sink ofc in the world and regularly appear alongside Cayman and Bermuda ("triad" Caribbean) as a group.
- Bermuda, shown as a US corporate tax haven; only 2nd to Ireland as a destination for U.S. tax inversion
- Cayman Islands, also features as a major US corporate tax haven; 6 most popular destinations for U.S. corporate tax inversions
- Gibraltar - like the Isle of Man, has declined because of concern, even by U.K., for its practice.
- Mauritius - has become a major tax haven for Southeast Asia (mainly India) and the African economy, and is now ranked 8th overall.
- Curacao - Dutch dependence is ranked 8th on the Oxfam tax haven list, and the 12th largest sink, but recently made the EU greylist.
- Liechtenstein - long established a very traditional European tax haven and just beyond the top 10 global sinks.
- The Bahamas - acting as a traditional tax haven (12th sink rank), and ranked 8th on the list of ITEP profits (figure 4, page 16) of the corporate paradise.
Unusual case
US custom entities not listed in the global tax haven list:
- Delaware (United States), special "terrestrial" special paradise with very strong secrecy laws, but rarely appears on the main list.
- Puerto Rico (United States), almost a "paradise" corporate tax concession by the US, but the Tax Cuts and Employment Act of 2017 are largely removed.
The main sovereign jurisdiction shown in the list of financial secrecy (for example, the Financial Secrecy Index), but not on the corporate tax haven or traditional tax haven list, is:
- United States - noted for confidentiality, according to the Financial Secrets Index, (see United States as tax haven); making a "controversial" appearance on some lists.
- Germany - similar to the U.S., Germany may be included in the list for its tax confidentiality, in accordance with the Financial Secrets Index
The US and Germany will fail the basic "taste-sense" of tax havens, ie whether companies or individuals are put back there to avoid taxes.
Former tax havens
- Beirut, Lebanon previously had a reputation as the only tax haven in the Middle East. However, this changed after the destruction of the Intra Bank in 1966, and the Lebanese political and military decline further hindered the foreign use of the country as a tax haven.
- Liberia has a prosperous vessel registration industry. A series of violent and bloody civil wars in the 1990s and early 2000s severely undermined confidence in jurisdictions. The fact that the ship registration business is still partly a proof of initial success, and partly evidence to move the national shipping registry to New York, USA.
- Tangier had a brief existence as a tax haven in the period between the end of effective control by Spain in 1945 until it was officially reunited with Morocco in 1956.
- Some Pacific islands are tax exempt but have been limited by OECD demands for regulation and transparency in the late 1990s, on blacklist threats. Vanuatu Financial Services Commissioner announced in May 2008 that his country would reform its law and stop being a tax haven. "We have been linked with this stigma for a long time and we are now aiming to get away from being a tax haven."
Methodology
The way tax havens operate can be seen in the following key contexts:
Private dwelling
Since the beginning of the 20th century, wealthy people from high tax jurisdictions have been trying to relocate themselves in low tax jurisdictions. In most countries of the world, shelter is the main basis of taxation - see tax dwellings. The low tax jurisdiction selected may collect no, or only very low income tax and may not levy a capital gains tax, or inheritance tax. Individuals usually can not return to a country with higher previous taxes for more than a few days of the year without returning their tax shelter to their previous country. They are sometimes referred to as tax exclusion.
Corporate Residency
Corporations may establish subsidiaries and/or regional headquarters in tax haven companies for tax planning purposes. When a company moves their legal headquarters to a shelter, it is known as a corporate tax inversion. The emergence of intellectual property, or IP, as a major BEPS tax tool, means that companies can achieve the many benefits of a tax inversion, without the need to move their headquarters. Apple's $ 300 billion quasi-invasive investment to Ireland by 2015 (see leprechaun economy) is a good example of this.
Asset hold
Asset ownership involves the use of an offshore trust or an offshore company, or a company-owned trust. The company or trust will be established in a tax haven, and will usually be managed and occupied elsewhere. This function is to hold assets, which may consist of investment portfolios under management, trading companies or groups, physical assets such as real estate or valuables. The essence of such an arrangement is that by converting asset ownership into non-resident tax entities in high tax jurisdictions, they cease to be taxable in that jurisdiction.
Often mechanisms are used to avoid certain taxes. For example, a wealthy heir may move his house to an offshore company; he can then settle the company's shares on trust (by himself as trustee with another trustee, while holding a lucrative life asset) for himself for life, and then for his daughter. At the time of his death, the share will automatically be born to a daughter, thus obtaining a house, without a house having to go through a will and judged by inheritance tax. Most countries assess inheritance taxes, and all other taxes, on real estate in their jurisdiction, regardless of the nationality of the owner, so this will not work with a home in most countries. This is more likely to be done with intangible assets.
Trade and other business activity
Many businesses do not require a specific geographic location or extensive manpower set in jurisdictions to minimize tax exposure. Perhaps the best illustration of this is the number of reinsurance companies that have migrated to Bermuda for years. Other examples include Internet-based services and group finance companies. In the 1970s and 1980s a group of companies was known to form offshore entities for "reinvoicing" purposes. These reinvoicing companies only make margins without performing any economic function, but when margins appear in tax-free jurisdictions, the company allows the group to "ward off" profits from high tax jurisdictions. The most sophisticated tax code now prevents this transfer pricing scheme.
Financial intermediaries
Many economic activities in tax havens today consist of professional financial services such as mutual funds, banking, life insurance, and pensions. Generally funds are kept with intermediaries in low tax jurisdictions, and intermediaries then lend or invest money (often returning to high tax jurisdictions). Although such systems typically do not evade taxes in major customer jurisdictions, it enables financial service providers to provide multi-jurisdictional products without adding another layer of taxation. This proved very successful in offshore funding. It is estimated that more than 75% of the world's hedge funds, perhaps the most risky form of collective investment vehicles, are domiciled in the Cayman Islands, with nearly $ 1.1 trillion in US assets maintained despite statistics in the speculative hedge fund industry.
The carrier stock allows anonymous ownership, and thus has been criticized for facilitating money laundering and tax evasion; This stock is also available in some OECD countries as well as in the US state of Wyoming. In a 2010 study in which researchers sought to establish anonymous companies found that 13 of 17 attempts were successful in OECD countries, such as the United States and Britain, while only 4 of 28 trials were successful in the countries that are usually labeled. tax havens. The last two countries in America allowing the carriers, Nevada and Delaware stocks to make them illegal in 2007. In 2011, an OECD counterpart recommended that the United Kingdom increase its stock law. Britain abolished the use of carrier stocks by 2015.
In 2012, the Guardian writes that there are 28 people as directors for 21,500 companies.
Money and exchange control
Most tax havens have a dual monetary control system, which distinguishes residents from non-residents as well as foreign currency from domestic, local currency. In general, citizens are subject to monetary control, but not non-residents. A company, belonging to a non-resident, when trading abroad is seen as non-resident in terms of exchange control. It is possible for foreigners to create companies in tax haven to trade internationally; the company's operations will not be subject to exchange controls while using foreign currency to trade outside the tax haven. Tax havens typically have currencies that are easily converted or linked to easy-to-convert currencies. Most can be converted to US dollars, euro or pound sterling.
Incentives for tax havens
Traditional and corporate taxes tend to have very high GDP per capita scores (in fact some commentators have suggested high GDP per capita scores as proxies for tax havens). This is because the heavenly national economic statistics are artificially inflated by the accounting flow that adds to GDP (and even GNP), but is not taxed. The smaller traditional and corporate tax liabilities represent most of the top 10 GDP per capita tables, excluding the oil and gas countries. This artificial GDP inflation can attract excess foreign capital (which may use Debt-to-GDP as their metric), and greater influence in the haven economy, resulting in greater prosperity. However, increasing leverage can also lead to more credit cycles that result in periods of financial crisis in heaven. An example is the Irish financial crisis in 2009-2013.
Dharmapala and Hines state that about 15% of the world's countries are tax havens (which reconcile with 29 Conduit and Sink OFCs), that these countries tend to be small and prosperous. They also suggest that better governed and regulated countries are more likely to become tax havens, and more likely to succeed if they become tax havens.
Menurut Investopedia,
Although most offshore financial centers do not impose corporate income tax, their government still benefits financially from having thousands of companies registered in their jurisdiction. That's because tax authorities typically charge a registration fee on all newly incorporated business entities such as corporations and partnerships. Also, the company is required to pay an annual renewal fee to remain recognized as an operating company.
There are also additional costs imposed on the company depending on the type of business activity they use. For example, banks, mutual funds and other companies in the financial services business usually need to pay an annual license to operate within the industry. All these different costs are added to create a strong recurring income source for the tax haven government. It is estimated that the British Virgin Islands collect more than $ 200 million annually in the form of corporate costs.
Setup steps
To avoid tax competition, many high tax jurisdictions have enacted laws to counter the potential tax protection of tax havens. Generally, the law tends to operate in one of five ways:
- Associate a company's revenue and profits or trust a tax haven to a taxpayer in the high tax jurisdiction on an arising basis. Controlled Foreign Company Legislation is an example of this.
- Transfer pricing rules, standardization that has been greatly helped by the OECD guidance announcement.
- Limitations on deductions, or the imposition of withholding tax when payment is made to a recipient overseas.
- The tax receipt from an entity in tax haven, is sometimes enhanced by notional interest to reflect a deferred payment element. EU tax withholding tax is probably the best example of this.
- Get out of cost, or weigh unrealized capital gains when individuals, trusts, or companies emigrate.
However, many jurisdictions use blunter rules. For example, in France, securities regulations are such that it is unlikely to have public bond issues through companies incorporated in tax haven.
Also becoming increasingly popular is the "forced disclosure" tax mitigation scheme. In general, this involves the income authorities drawing tax advisors to disclose details of the scheme, so that the gap can be closed during the next tax year, usually by one of the five methods shown above. Although not specifically aimed at tax havens, since so many tax deduction schemes involve the use of offshore structures, the effect is almost the same.
Anti-evasion became famous in 2010/2011 as non-governmental organizations and politicians in the leading economies sought ways to reduce tax evasion, which played a role in forcing unpopular cuts on social and military programs. The International Financial Center Forum (IFC Forum), a trade organization for companies located in the UK Foreign Territory and Crown Dept., has requested a balanced debate on the issue of tax evasion and an understanding of the role that the small international tax neutrality of the financial center plays a role in the economy global.
Modern developments
US. Legislation
The Overseas Account Tax Compliance Act (FATCA) was passed by the US Congress to stop the flow of money out of the country into tax sheltered bank accounts. With strong support from the Obama Administration, Congress drafted the FATCA law and added it to the Recruitment Incentive for Labor Return (HIRE) signed into law by President Obama in March 2010.
FATCA requires foreign financial institutions (FFI) from a wide range - banks, stockbrokers, hedge funds, pension funds, insurance companies, trusts - to report directly to the Internal Revenue Service (IRS) of all US clients. Beginning in January 2014, FATCA requires FFI to provide an IRS annual report on the name and address of each US client, as well as the largest account balance of the year and the total debits and credits from any US owned account. If an institution does not comply, the US will impose a 30% withholding tax on all transactions related to US securities, including proceeds from the sale of securities.
In addition, FATCA requires foreign companies not listed on the stock exchange or foreign partnership that owns 10% US ownership to report to the IRS name and tax identification number (TIN) of any US owner. FATCA also requires US citizens and green cardholders who have foreign financial assets of more than $ 50,000 to complete a new 8938 Form submitted with a 1040 tax refund, commencing with fiscal year 2010. The delay shows controversy over the feasibility of applying the law as evidenced in this paper from Peterson Institute for International Economics.
An unintended consequence of FATCA and compliance fees for non-US banks is that some non-US banks refuse to serve American investors. Concern has also been raised that, because FATCA operates by enforcing tax cuts on US investment, it will encourage foreign financial institutions (especially hedge funds) from investments in the US and thereby reduce liquidity and capital inflows to the US.
Network Report of Justice Taxes 2012
A 2012 report by the British Justice Justice Network estimates that between US $ 21 trillion and $ 32 trillion are protected from taxes at unreported tax-free places around the world. If the wealth earns 3% every year and the capital gains are taxed at 30%, it will earn between $ 190 billion and $ 280 billion in tax revenues, more than any other tax shelter. If the hidden offshore assets are considered, many countries with nominal government in debt are shown as net creditor countries. Yet, while widely quoted, the methodology used in the calculations has been questioned, and the tax policy director of the Chartered Institute of Taxation also expressed skepticism over the accuracy of the figures. Another recent study estimates the amount of global offshore wealth at a smaller - but still considerable - figure of US $ 7.6 trillion. This estimate only covers the financial asset: "My method may provide a lower threshold, in part because it only captures financial wealth and ignores tangible assets.After all, high value individuals can store artwork, jewelry, and gold in freeports, the storage of valuables - Geneva, Luxembourg and Singapore all have them.Individuals with high wealth also have real estate abroad. "A study of 60 large US companies found that they deposited $ 166 billion in offshore accounts during 2012, protecting more than 40% of their profits from US taxes.
Bank leakage 2013
Details of thousands of owners of offshore companies were published in April 2013 in a joint collaboration between The Guardian and the International Consortium of Investigative Journalists. The data is then published on publicly accessible websites in an effort to "collect" the data. The publication of the list appears to coincide with the 2013 G8 Summit chaired by British Prime Minister David Cameron emphasizing tax avoidance and transparency.
Liechtenstein banking scandal
Germany announced in February 2008 that it had paid EUR4.2 million to Heinrich Kieber, former LGT Treuhand data archive, Liechtenstein bank, for a list of 1,250 bank customers and their account details. Investigations and arrests were followed related to allegations of illegal tax evasion. German authorities share data with US tax authorities, but the UK government pays more than £ 100,000 for the same data. Other governments, notably Denmark and Sweden, refused to pay information about it as a stolen property. Liechtenstein authorities later accused German espionage authorities.
However, regardless of whether illegal tax evasion is involved, the incident has sparked a perception among European governments and the press that the tax haven provides a confidentiality-covered facility designed to facilitate unlawful tax evasion rather than legitimate tax planning and mitigation schemes tax law. This in turn has led to calls for "crackdown" on tax havens. Whether the call for such a crackdown is merely an attitude or leads to a more certain activity by mainstream economies to limit access to the tax haven is still unseen. There are no definitive announcements or proposals made by the EU or governments of member countries.
German law
Peer SteinbrÃÆ'¼ck, a former German finance minister, announced in January 2009 a plan to amend fiscal legislation. The new regulations will prohibit payments to companies in certain countries that protect money from disclosure rules that would be expressed as operating costs. This effect will make banks in such countries unattractive and expensive.
English Foot Report
In November 2009, Sir Michael Foot, a former Bank of England official and Bahamas bank inspector, submitted a report on the British Crown and Foreign Affairs Dependencies for HM Treasury. The report shows that while many areas "have a good story to tell," others need to improve their ability to detect and prevent financial crime. The report also stresses the view that a narrow tax base presents long-term strategic risks and that the economy should seek to diversify and expand their tax base.
This shows that tax revenues lost by the British government appear to be much smaller than previously estimated (see above under Loss of tax revenues), and also stress the importance of liquidity provided by the region to the UK. The Crown Dependencies and Overseas Territories widely welcomed the report. The Tax Court Network's pressure group, unhappy with the findings, commented that "[a] weak man, born to be an apologist, has delivered a weak report."
G20 taxpayer blacklist
At the G20 London Summit on April 2, 2009, G20 nations agreed to assign a blacklist for tax havens, to be segmented under a four-tiered system, based on compliance with "internationally agreed tax standards." The list of April 2, 2009 can be viewed on the OECD website. Four levels are:
- Those who have substantially applied the standard (including most countries but China still exclude Hong Kong and Macau).
- A committed tax - but not fully implemented - standards (including Montserrat, Nauru, Niue, Panama and Vanuatu)
- A committed financial center - but not yet fully implemented - standards (including Guatemala, Costa Rica and Uruguay).
- Those who have not committed to the default (empty category)
The countries in the lower layers were initially classified as 'tax tax havens'. Uruguay was initially classified as uncooperative. However, after the appeal, the OECD stated that they complied with the tax transparency regulations and then raised it. The Philippines took steps to remove itself from the blacklist and Malaysian Prime Minister Najib Razak had previously suggested that Malaysia should not be at the bottom.
In April 2009 the OECD announced through its leader Angel Gurria that Costa Rica, Malaysia, the Philippines and Uruguay were removed from the blacklist after they made a "full commitment to exchange information with OECD standards." Despite calls from former French President Nicolas Sarkozy for Hong Kong and Macao to be included on the list separately from China, they have not been entered independently, although it is expected that they will be added later on.
The government's response to this crackdown is broadly supportive, though not universal. Luxembourg Prime Minister Jean-Claude Juncker criticized the list, stating that he "lacked credibility", for failing to include various US states that provided a merge infrastructure that could not be distinguished from the purely taxed aspects of the G20 object. In 2012, 89 countries have implemented sufficient reforms to be listed on the OECD white list. According to Transparency International, half of the most corrupt countries are tax havens.
Blacklist tax tax haven
In December 2017, the EU adopted a blacklist of tax havens in an attempt to prevent the most aggressive tax avoidance practices. It also has a gray list that includes people who have committed to changing their regulations on tax transparency and cooperation. The 17 blacklisted regions are: American Samoa, Bahrain, Barbados, Grenada, Guam, South Korea, Macau, Marshall Islands, Mongolia, Namibia, Palau, Panama, Saint Lucia, Samoa, Trinidad and Tobago, Tunisia, United Arab Emirates. Some activists have criticized the record-keeping process as chalk and called for its inclusion in the blacklist of several EU countries accused of facilitating tax evasion, such as Luxembourg, Malta, Ireland and the Netherlands.
General Reporting Standards (CRS)
The General Reporting Standards are the information standard for automated tax and financial information exchange at the global level developed by the Organization for Economic Cooperation and Development in 2014. Participating in CRS from 1 January 2017 onwards are Australia, Bahamas, Bahrain, Brazil, Brunei Darussalam , Canada, Chile, China, Cook Islands, Hong Kong, Indonesia, Israel, Japan, Kuwait, Lebanon, Macau, Malaysia, Mauritius, Monaco, New Zealand, Panama, Qatar, Russia, Saudi Arabia, Singapore, Switzerland, Turkey, Uni United Arab Emirates, Uruguay.
Criticism
Tax Havens have been criticized because they often result in the accumulation of inefficient and inefficient unemployed money for companies to repatriate. The benefits of tax protection generate tax incidents that harm the poor outside of tax haven. Many tax havens are considered to have connections to fraud, money laundering and terrorism. While investigations of illegal tax abuse have taken place, there are some beliefs. The lobby associated with tax havens and related pricing transfers was also criticized.
Some politicians, such as judge Eva Joly, began to oppose the use of tax havens by large corporations. He described tax evasion as a threat to democracy. Accountants' opinions on tax haven appeals have grown, because they have opinions from corporate users, governments and politicians, although their use by Fortune 500 companies and others remains widespread. A reform proposal centered on the Big Four accounting firm has been advanced. Some governments seem to use computer spyware to research some companies' finances.
Influence of developing countries
The illegal capital flight of developing countries is estimated at ten times the amount of aid received and twice the debt payments it pays. About 60 percent of the illicit capital flight from Africa comes from mispricing transfers, where subsidiaries in developing countries sell to subsidiaries or other shell companies in tax haven at low artificially low prices to pay taxes. The AU report estimates that about 30% of sub-Saharan African GDP has been transferred to tax havens. A tax analyst believes that if the money is paid, most of the continent will be "developed" now.
History
The use of different tax laws between two or more countries to try to reduce tax obligations may be as old as the tax itself. In Ancient Greece, some Greek Islands were used as storage by the seafaring traders of the time to place their foreign goods thus avoiding the two percent tax imposed by the city-state of Athens on imported goods. This practice may first achieve excellence through the evasion of the Cinque Harbor and then the principal ports of the twelfth and fourteenth centuries respectively. In 1721, the American colonies were trafficked from Latin America to avoid British taxes.
Various countries claim to be the oldest tax haven in the world. For example, the Channel Islands claim their tax independence dating as far as the Norman conquest, while the Isle of Man claims to track its fiscal independence even earlier. Nevertheless, the modern concept of tax haven is generally accepted to have emerged at an uncertain point in the immediate aftermath of World War I. Bermuda sometimes optimistically claims to be the first tax haven based on the creation of the first offshore legislation in 1935 by the new law firm of Conyers Dill & amp; Pearman. However, the Bermudian claim is arguable when compared to the enactment of the Trust Law by Liechtenstein in 1926 to attract offshore capital.
Most economic commentators suggest that the first "true" tax haven is Switzerland, followed by Liechtenstein. Swiss banks have long been a capital haven for people who fled from social turmoil in Russia, Germany, South America and elsewhere. However, in the early twentieth century, for many years immediately after World War I, many European governments raised taxes sharply to help pay for the reconstruction effort after the devastation of World War I. In general, Switzerland remained neutral during the Great War, avoiding infrastructure costs these additions and consequently are able to maintain a low tax rate. As a result, there is an influx of capital into the country for tax-related reasons. It is difficult, however, to determine a single event or the exact date that clearly identifies the emergence of a modern tax haven.
The use of modern tax havens has passed through several phases of development after the interwar period. From the 1920s to the 1950s, tax havens were usually referenced as private tax evasion. Terminology is often used with reference to countries where a person can retire and reduce their post-retirement tax positions, the use of which is still echoed to some extent in the 1990 report, which includes an indication of the quality of life in tax havens that future tax exile might want considered.
From 1950 onwards, there was significant growth in tax haven usage by group companies to reduce their global tax burden. Strategies generally depend on multiple tax treaties between large jurisdictions and high tax burdens (that companies will submit), and smaller jurisdictions with lower tax burdens. By organizing group ownership through smaller jurisdictions, companies can take advantage of double taxation treaties, paying taxes at much lower rates. Although some of these double tax treaties survive, for example between Barbados and Japan, between Cyprus and Russia and Mauritius with India, which attempted to be renegotiated in 2007, most major countries began to cancel double taxation treaties with micro countries in the year 1970s. , to prevent corporate tax leak in this way.
Source of the article : Wikipedia
0 Comments