Because of the level of taxation in most industrialized countries, many turn to tax havens. Tax havens are places where people and businesses move to avoid paying high taxes. This writes GoBankingRates.
According to the International monetary Fund, tax havens cost governments between $500 to $600 billion a year — mostly in the form of revenues from corporate tax, which they can’t collect. In addition, at least 366 companies in the Fortune 500 base, at least one subsidiary in tax havens.
According to the Institute on taxation and economic policy (ITEP), by 2017, Apple booked $246 billion in offshore, avoiding taxes on $76,7 billion Apple repatriate the money after the President of the United States Donald trump lowered the tax on the money from 35% to 15.5%.
The Bahamas is a former British colony, gained independence in 1973. This Caribbean island country attracts tax evaders due to the lack of withholding or corporate taxes. Instead it receives income from taxes such as import duties, value added taxes and license fees. That and their proximity to the U.S. make them attractive tax haven.
The island became a center of banking. Companies also benefit from privacy laws, which do not require submission of financial records to the government. For this reason, you can understand why Goldman Sachs and JPMorgan Chase controlled there the subsidiaries.
Located between the United States and Europe, Bermuda became a popular tax haven. As in the Bahamas, there is no tax on corporate income, interest, dividends or royalties. Corporations such as Nabors Industries and Signet Jewelers, decided to base their work on British overseas territories.
Bermuda has also been found in the center of the prominent schemes of tax evasion. The Paradise Papers reported that Nike has transferred part of its European profits from the Netherlands via Bermuda, tax free. Google also hid $23 billion from foreign countries in Bermuda in 2017. Regulators have put pressure on the country, so they closed some loopholes that make possible such movement of income. However, given the politics of this area and its proximity to the US and Europe, it will probably remain popular financial and business centre.
British virgin Islands
The British virgin Islands and Bermuda remain overseas British possessions. However, as in Bermuda, mild neglect of British rule has allowed to obtain the status of tax havens. Despite a population of less than 36,000 people, in the British virgin Islands is home to more than 400 000 companies, and their assets are estimated at around $1.5 trillion.
International tax guide Deloitte says that the Islands are not taxed on interest, dividends or corporate income. However, they are taxed at salaries at the rate of 10% or 14% on all income above $10,000. Financial services also account for 62% of government revenues.
Officials insist that the British virgin Islands are not a tax haven.
Like other British overseas territory, the Cayman Islands have become one of the most notable tax havens. Despite the fact that the population of the country is slightly more than 59 600 people in this area is based more than 65 000 companies. These include American Depository or holding companies that allow Alibaba, Baidu and other companies in China to trade on American stock exchanges.
Crystal Stranger, leading accountant at Greenback Business Services, believes the Islands “probably the biggest (tax) loophole in the present, both for individuals and for multinational corporations.” One of the areas where it stands out in banking. Despite its small size, according to The Guardian, it accounts for nearly 1/15 of the global banking assets of $30 trillion.
The channel Islands are an archipelago off the coast of Normandy. Despite their location, the Islands do not belong to either France or the United States. However, English is an official language, and Britain is responsible for defense of the Islands. The Islands are actually two of the British crown: the bailiwick of Jersey and bailiwick of Guernsey.
However, the channel Islands became most famous as a tax haven. Corporate tax for most companies is 0%, but they increase to 10% if the company is marked as the “company financial services” and can go up to 20% for other types of companies. He also does not charge tax on capital gains or inheritance taxes. According to the Paradise Papers, Apple has moved the tax residency to Jersey in 2014 and have saved up to $252 billion in offshore cash in Jersey.
The Isle Of Man
The Isle of man is a self — governing British island in the Irish sea between England and Ireland. In addition, it is known as the birthplace of the bee gisa, it is also know as a place to protect wealth.
The Isle of man is not taxed on capital gains or inheritance and does not collect taxes from companies. Many companies also keep there pension benefit, as some beneficiaries may receive benefits in the 50 years. However, they like to keep a low profile. When “the Paradise papers” shed light on how rich people protect assets, a local politician called the revelation “an organized attack from the international media.”
In the 90 years Ireland was considered one of the poorest countries in Europe. However, the accession to the EU and lower corporate taxes to 12.5%, it seemed, had transformed the country overnight. It continues to attract more than 700 transnational corporations in the country, including Airbnb, Facebook and LinkedIn.
While Irish officials can evade the label of “tax shelter”, the country was subjected to careful control. In 2013, Apple was forced to pay a record fine of 13 billion euros ($14.4 billion) after it became clear that the deal between Apple and Ireland breached the tax legislation of the EU. According to the Paradise Papers, this led to the fact that Apple has moved their cash overseas to the channel Islands.
Luxembourg is a small country of the EU, located between France, Germany and Belgium. This country with a population of about 614 000 people were able to raise capital due to tax laws favorable for business. Nevertheless, the policy seemed too friendly to the EU, which said it was one of the countries “showed the features of tax havens, and promoting aggressive tax planning”.
Nevertheless, Luxembourg remains a favorite among the Fortune 500. Approximately 35% of the Fortune 500 corporations run a subsidiary in Luxembourg, according to ITEP. Among them, Amazon, which chose Luxembourg as its European headquarters.
Malta is a sovereign country off the coast of Sicily. This is one of the smallest EU members. Once a British colony, this tiny island nation with a population of just fewer than 500,000 inhabitants became independent in 1964.
Some journalists call Malta a “pirate base” for tax evasion. In “the Paradise papers” Malta is also mentioned in the list of tax havens. However, officials insist that they comply with the EU laws.
While local companies pay a corporate tax rate of 35%, some external organizations pay 0-6,25%. According to ITEP, a little less than 5% of Fortune 500 run subsidiary on the island. Morgan Stanley, Marriott International and Abbott Laboratories are among those corporations.
A tiny island nation located off the coast of Madagascar, seems an unlikely place for a tax haven. However, the corporate tax rate has attracted a large percentage of the Fortune 500 to Mauritius. Companies pay 15% tax on their income. Individuals do not pay tax on capital gains, and the country levies a 3% tax on dividends from abroad.
The Principality of Monaco is a city-state with an area of 0.85 square miles, located on the French Riviera. Long a favorite place of the rich in the world, it also became an attractive place for the wealth. Individuals do not pay income tax, but businesses do not face direct taxation in most cases.
Despite the low taxes, job in Monaco doesn’t come cheap, as it boasts some of the world’s most expensive real estate. Despite costs, according to ITEP, seven companies of the Fortune 500 run subsidiaries in the Principality.
The Netherlands is the most popular tax haven in the world among the Fortune 500. The Dutch have long allowed corporations to reduce their tax burden by moving the money through Dutch subsidiaries. Moreover, such technological giants as Google and IBM, have significant presence in the country and Fiat Chrysler have chosen the country as their headquarters.
In the United States tax season 2018 has left taxpayers with an average refund of $3 186. Many taxpayers seek to protect the refund or find a suitable place to spend or invest the refund. But what if you never had to give money to the government?
Residents of Puerto Rico generally do not pay Federal income tax in the United States, although Puerto Ricans are US citizens. In addition, in 2012, bill 22 extended the tax exemption for interest, dividends and capital gains. It gives wealthy Americans the opportunity to avoid taxation.
Many consider Singapore one of the best countries in the world in taxes. Located on the southern tip of the Malay Peninsula, he once mired in poverty. In 1965, GDP per capita was only $516. It was then that the government began to improve education, to suppress corruption and reduce tax rates.
Singapore assesses corporate income tax at 17%, not including tax benefits, and the city-the state does not tax dividends. According to ITEP, more than 40% of the Fortune 500 operated a subsidiary in Singapore in 2016.
Switzerland has long served as European financial center. Low taxes and a reputation of secrecy made it a tax haven. While some privacy laws have already been lost, his reputation remains reasonable taxation. Switzerland charges a corporate tax rate of only 8.5%.
Although the Global index of financial centers from the Long Finance no longer includes Zurich in the top 10 financial centers, it remains a popular tax haven. According to the ITEP report, about 35% of the Fortune 500 have at least one subsidiary in the Swiss Confederation. Such corporations are Marriott International, Morgan Stanley and PepsiCo.