December 10, 2023

What are tax havens?  The answer explains why the G7's efforts to end it are unlikely to succeed

What are tax havens? The answer explains why the G7’s efforts to end it are unlikely to succeed

Close your eyes and imagine a tax haven. Can you think of a Caribbean island? Sand browsing and thousands of mailboxes with fake companies?

Some tax havens, such as the Cayman Islands or Bermuda, Fits this description. Many others don’t.

Tax haven key are taxes, Not. Any place that allows a taxpayer—whether an individual or a corporation—to get a lower tax bill abroad than at home is a tax haven. As a result, depending on the jurisdiction and the actions of the taxpayer, many places are turning into tax havens, even the United States.

A recent deal between the Group of Seven rich countries Tried to eliminate corporate tax havens By introducing a minimum global tax rate of 15% for businesses. However, like a Tax expertI find it hard to take this endeavor seriously.

3 things that make a tax haven a tax haven

Easy, tax havens These are the jurisdictions that offer low or even no taxes to attract foreign investment.

From a taxpayer’s point of view, the first sign of a good tax haven is that it is completely legal. While it may seem that people using tax havens to reduce their tax debt are breaking the law, this is rarely the case.

The taxpayer who feels comfortable with it You don’t need a tax haven. Instead, a dishonest accountant and a less honest banker It’s all you need.

The second signs of a good tax haven are transparency, political stability, and the rule of law. When avoiding taxes abroad costs lawyers, accountants, and bribes more than paying taxes locally, there is no point in going to a tax haven.

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The third sign is privacy. Swiss banks have been implementing the gold standard here for many years Refuse to tell anyone about depositors. That changed in 2008 when Swiss banks البنوك I have agreed to inform the depositors in 43 European countries.

The Complete loss of confidentiality Introduction once from Switzerland The front end of the company was created إنشاء – And the states that make it easy – more attractive. fake company These are basically companies that do not have active business operations or have large assets on top of each other to make tracking ownership difficult.

From his point of view

Defining a tax haven is not as easy for governments that want to control as it is for taxpayers who seek it. This is mainly because governments and international organizations tend to believe that tax havens are in a different location than where you live.

For example the European Union Develop an annual list of tax havens Which, however, do not contain EU member states Lots Other menus Designation of Ireland, Luxembourg and a large number of other European countries as tax havens.

and through Several groups named The United States as a tax haven – Forbes even calls it the best in the world – US government Won’t do it againAlthough it meets all the basic criteria such as: Providing legal ways to avoid almost all taxes and the High privacy for taxpayers.

racing down

So Global Corporate Tax Treaty G-7 at least 15% It will hardly work.

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Of course I appreciate the effort. Without a minimum tax, countries are stuck in a never-ending journey racing downEvery time one government lowers corporate tax rates, another government follows with lower rates.

The problem is that the G7 has to adjust more than 130 other countries to their lowest tax rate. Many countries, including Ireland and China, It seems unlikely that you will give up anything Which brought them many economic advantages.

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