Tax Info Hub
Tax
Proportional Tax
Progressive Tax
Regressive Tax
Direct Tax
Indirect Tax
Purposes And Effects Of Tax
Forms Of Taxation
Tax Rate
Types Of Tax
Tax Avoidance And Tax Evasion
Tax Exemption
Tax Fraud
Tax Freedom Day
Tax Incidence
Tax Resistance
Tax Shelter
Tax Haven
Tax In Different Regions
Taxation In Australia
Taxation In Canada
Taxation In Colombia
Taxation In Germany
Taxation In Indonesia
Taxation In New Zealand
Home » Tax Haven
 

Tax Haven
Tax haven implicates specific taxes levied at a lower rate in certain places. It is beneficial to relocate to those places where the tax rate is low. As a result a common trend of moving to these places is observed leading to tax competition in the government. There are various jurisdictions for various types of taxes and various categories of people. The definition of Tax haven led by Colin Powell is widely accepted.

According to this definition tax haven provides space for a complex tax structure and create a situation for tax demands in the global financial market. Get comprehensive insight on tax haven from the pages of taxinfohub.com. The Organisation for Economic Co-operation and Development (OECD) adopts various methods to analyze whether a tax haven has legal bound: Tax havens impose nominal taxes that are utilized by non-residents in order to cheat high taxation amounts in their residential country. Tax havens impose strict rules under which individual and business persons benefit from exploitation of the personal financial information. The strict rules are also scrutinized by foreign tax authorities. OECD sees whether the laws are applied consistently and effectively. Various practices like ‘Secret rulings’ and 'negotiated tax rates' should be curbed to make the laws transparent. Hence the major factors that determine whether a tax haven is jurisdiction or not are nominal taxes, transparency in law and security of personal financial information. According to the OECD every jurisdiction has a right to decide whether to impose direct taxes or not. If direct taxes are imposed the appropriate tax rate should also be determined.

The practice of tax haven first began in the Cinque ports and staple ports in the early twelfth and fourteenth centuries. According to another group of opinion Hanseatic League is said to be the first groups who welcomed the concept of tax haven and tax competition. The tax pattern of the Vatican City resembled tax haven. Some other countries housing tax haven are Channel Islands, Switzerland and Liechtenstein. The newer concept of tax haven was practiced in various countries of the world after the first world war.

The modern form of tax haven is the result of modification that several tax havens have undergone in due course of time. In the early nineties tax havens were used as a mode of personal tax avoidance. Post 1950s observed a significant change in the use of tax havens. Business communities used tax havens to reduce the burden of global tax. There occurred a double taxation treaty among a large jurisdiction with a huge tax burden and a comparatively small jurisdiction with a reduced tax burden. The business groups took advantage of the double taxation treaty and paid taxes at low rates. As a result most countries banned double taxation treaties after 1970. It is in the 1980s and 90s OECD took initiative by implementing various laws to curb the abuses of tax haven.

The site taxinfohub.com provides comprehensive insight on tax haven.