Government response to the crackdown has been broadly supportive, although not universal.
In December , European Union adopted blacklist of tax havens in a bid to discourage the most aggressive tax dodging practices. It also had a so-called gray list which includes those who have committed to change their rules on tax transparency and cooperation. The 17 blacklisted territories are: The Common Reporting Standard is an information standard for the automatic exchange of tax and financial information on a global level developed by the Organisation for Economic Co-operation and Development in The use of differing tax laws between two or more countries to try to mitigate tax liability is probably as old as taxation itself.
The practice may have first reached prominence through the avoidance of the Cinque Ports and later the staple ports in the twelfth and fourteenth centuries respectively. In , American colonies traded 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 back as Norman Conquest , while the Isle of Man claims to trace its fiscal independence to even earlier times. Nonetheless, the modern concept of a tax haven is generally accepted to have emerged at an uncertain point in the immediate aftermath of World War I.
Most economic commentators suggest that the first "true" tax haven was Switzerland , followed closely by Liechtenstein. However, in the early part of the twentieth century, during the years immediately following World War I , many European governments raised taxes sharply to help pay for reconstruction efforts following the devastation of World War I.
By and large, Switzerland, having remained neutral during the Great War, avoided these additional infrastructure costs and was consequently able to maintain a low level of taxes. As a result, there was a considerable influx of capital into the country for tax related reasons.
Tax Havens: International Tax Avoidance and Evasion
It is difficult, nonetheless, to pinpoint a single event or precise date which clearly identifies the emergence of the modern tax haven. The use of modern tax havens has gone through several phases of development subsequent to the interwar period. From the s to the s, tax havens were usually referenced as the avoidance of personal taxation. The terminology was often used with reference to countries to which a person could retire and mitigate their post retirement tax position, a usage which was still being echoed to some degree in a report, which included indications of quality of life in various tax havens which future tax exiles may wish to consider.
From the s onward, there was significant growth in the use of tax havens by corporate groups to mitigate their global tax burden. The strategy generally relied upon there being a double taxation treaty between a large country with a high tax burden that the company would otherwise be subject to , and a smaller country with a low tax burden. By structuring the group ownership through the smaller country, corporations could take advantage of the double taxation treaty, paying taxes at the much lower rate.
Although some of these double tax treaties survive, [ when? In the early to mids, most tax havens changed the focus of their legislation to create corporate vehicles which were " ring-fenced " and exempt from local taxation although they usually could not trade locally either.
These vehicles were usually called "exempt companies" or " international business corporations ". However, in the late s and early s, the OECD began a series of initiatives aimed at tax havens to curb the abuse of what the OECD referred to as " unfair tax competition ". Under pressure from the OECD, most major tax havens repealed their laws permitting these ring-fenced vehicles to be incorporated, but concurrently they amended their tax laws so that a company which did not actually trade within the country would not accrue any local tax liability.
From Wikipedia, the free encyclopedia. Taxation An aspect of fiscal policy Policies. Tax rate Flat Progressive Regressive Proportional. Offshore financial centre and Corporate tax haven. No or nominal tax on the relevant income; Lack of effective exchange of information; Lack of transparency; No substantial activities e.
Tax rate — focus on effective tax rates , like the Hines-Rice list ,  and the Dharmapala-Hines list. While individual relocations are hard to track, corporations are easier. The top 3 destinations for all U. Ireland 1 , Bermuda 2 and the U. Qatar, Norway , and micro jurisdictions, the resulting highest GDP-per-capita countries are tax havens, led by: Luxembourg 1 , Singapore 2 , and Ireland 3. Tax Havens" . Spiegel, "Offshore Financial Centers: This section may require cleanup to meet Wikipedia's quality standards.
The specific problem is: September Learn how and when to remove this template message. Fixed exchange rate , Dollarization , and Money laundering. Foreign Account Tax Compliance Act. Taxation of United States persons and Taxation of non-resident Americans. S multinationals are the most dominant source of global tax avoidance, and users of tax havens. In , the IRS issued regulations that enabled U. Definition of tax haven: A country with little or no taxation that offers foreign individuals or corporations residency so that they can avoid tax at home.
Retrieved 27 December A tax haven is a country or place which has a low rate of tax so that people choose to live there or register companies there in order to avoid paying higher tax in their own countries. Journal of Public Economics. The Review of Economics and Statistics.
The use of private "unlimited liability company" ULC status, which exempts companies from filing financial reports publicly. Local subsidiaries of multinationals must always be required to file their accounts on public record, which is not the case at present.
Ireland is not just a tax haven at present, it is also a corporate secrecy jurisdiction. Various attempts have been made to identify and list tax havens and offshore finance centres OFCs. This Briefing Paper aims to compare these lists and clarify the criteria used in preparing them.
The Quarterly Journal of Economics. Gabriel Zucman University of Berkley. With a conservatively estimated annual revenue loss of USD to billion, the stakes are high for governments around the world. The impact of BEPS on developing countries, as a percentage of tax revenues, is estimated to be even higher than in developed countries. Tracking Personal Wealth and Corporate Profits".
Tax Havens: International Tax Avoidance and Evasion
Journal of Economic Perspectives. Retrieved 20 November Antigua and Barbuda 4. British Virgin Islands Isle of Man Vincent and the Grenadines The New Palgrave Dictionary of Economics. Tax havens are low-tax jurisdictions that offer businesses and individuals opportunities for tax avoidance. They attract disproportionate shares of world foreign direct investment, and, largely as a consequence, their economies have grown much more rapidly than the world as a whole over the past 25 years.
Per capita real GDP in tax haven countries grew at an average annual rate of 3. Jersey bet its future on finance but since it has fallen on hard times and is heading for bankruptcy.
Full text of "R Tax Havens International Tax Avoidance and Evasion"
Is the island's perilous present Britain's bleak future? Lindsey 12 October Journal of Accounting Research. Finally, we find that US firms with operations in some tax haven countries have higher federal tax rates on foreign income than other firms.
- San Jieh Dao.
- Louisa: A Sweet and Humorous Regency Novel (Catherine Moorhouse Regency Trilogy Book 2).
This result suggests that in some cases, tax haven operations may increase US tax collections at the expense of foreign country tax collections. Jackson 11 March Theory and Evidence" PDF. Council of Economic Advisors. There is no generally agreed definition of what a tax haven is. International Tax Avoidance and Evasion". Congressional Research Service , Cornell University. European Parliamentary Research Service. Oxford Review of Economic Policy.
Although tax havens have attracted widespread interest and a considerable amount of opprobrium in recent years, there is no standard definition of what this term means.
Typically, the term is applied to countries and territories that offer favorable tax regimes for foreign investors. Tax Haven Literature Review: We identify 41 countries and regions as tax havens for the purposes of U. Together the seven tax havens with populations greater than one million Hong Kong, Ireland, Liberia, Lebanon, Panama, Singapore, and Switzerland account for 80 percent of total tax haven population and 89 percent of tax haven GDP.
Concerning the characterization of tax havens, we follow the definition proposed by Hines and Rice which has been recently used by Dharmapala and Hines Archived from the original on 12 May International Tax and Public Finance. The four OECD member countries Luxembourg, Ireland, Belgium and Switzerland, which can also be regarded as tax havens for multinationals because of their special tax regimes. Alex Cobham of the Tax Justice Network said: According to Turner, this standard is outdated and has been proven to not really work.
Ireland does not meet any of the OECD criteria for being a tax haven but because of its Some experts see no difference between tax havens and OFCs and employ the terms interchangeably. Yet today it is difficult to distinguish between the activities of tax havens and OFCs.
Geographical information about where this report originated or about its content. Description This report discusses the State of the Union address, which is a communication between the President and Congress in which the chief executive reports on the current conditions of the United States and provides policy proposals for the upcoming legislative year. Physical Description 19 pages. Who People and organizations associated with either the creation of this report or its content. Author Gravelle, Jane G. Senior Specialist in Economic Policy.
Publisher Library of Congress. About Browse this Partner. What Descriptive information to help identify this report. Identifier Unique identifying numbers for this report in the Digital Library or other systems. Collections This report is part of the following collection of related materials. About Browse this Collection. As the access to this document is restricted, you may want to search for a different version of it. Langenmayr, Dominika Irma, Are Europe and the U.
Evidence from Multinational U. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: See general information about how to correct material in RePEc. For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: General contact details of provider: