What is a Tax Haven?
A tax haven or offshore financial center is any country or jurisdiction that offers minimal tax liability to foreign individuals and businesses. Tax havens do not require businesses to operate out of their country or the individuals to reside in their country to receive tax benefits.
Benefits to a Tax Haven
• To Tax Haven Countries – The countries benefit by way of attracting capital to their banks and financial institutions, which can then be used to build a thriving financial sector.
• To Individuals or Businesses – The individuals and businesses benefit by saving tax, which in tax haven countries may range from zero to low single digits compared to high taxes in their country of citizenship or domicile.
Source https://corporatefinanceinstitute.com/resources/knowledge/other/what-is-tax-haven/
Top Tax Havens in the World
1. Bermuda : zero percent tax rate and no personal income tax
2. Netherlands – Most popular tax haven among the world’s Fortune 500. The government uses tax incentives to attract businesses to invest in their country. One such tax incentive cost an estimated 1.2 billion euros in 2016 to Netherlands.
• Luxembourg – It gives benefits such as tax incentives and zero percent withholding taxes.
• Cayman Islands – No personal income taxes, no capital gains taxes, no payroll taxes, no corporate taxes, and the country does not withhold taxes on foreign entities.
• Singapore – Charges reasonable nominal corporate taxes. Reasonable corporate tax rates are provided through tax incentives, lack of withholding taxes, and what appears to be substantial profit shifting.
• The Channel Islands – No capital gains taxes, no council taxes, and no value added taxes.
• Isle of Man – No capital gains tax, turnover tax. or capital transfer tax. It also imposes a low income tax, with the highest rates at 20%.
• Mauritius – Low corporate tax rate and no withholding tax.
• Switzerland – Full or partial tax exemptions depending on the bank used.
• Ireland – Referred to as a tax haven despite officials asserting that it is not. Apple discovered that two of the company’s Irish subsidiaries were not classified as tax residents in the United States or Ireland, despite being incorporated in the latter country.
Top Companies that Benefit from Tax Havens
1. Apple – Amount booked offshore is $214.9 billion. It uses Ireland as a tax haven. Would have owed the U.S. government $65.4 billion in taxes if tax haven benefits were not used.
2. Nike – It holds $10.7 billion offshore. It uses Bermuda as a tax haven. It would have paid $3.6 billion for taxes if tax havens benefits were not used. This implies Nike pays a mere 1.4% tax rate to foreign governments on those offshore profits, indicating that nearly all of the money is officially held by subsidiaries in tax havens.
3. Goldman Sachs – It holds $28.6 billion offshore and uses Bermuda as a tax haven.
4. Some of the 50 biggest U.S. companies that have stashed approximately $1.6 trillion o
