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Tax havens
- 1. By: Achal Arora AkashGholap Alka Mitul Panchal Utkristha Somani Shri Ram College of Commerce- Global Business Operations (2017-19)
- 2. “Tax Havens arelow-jurisdictions that provide companies, investors and individuals opportunities for tax avoidance and evasion.”
- 3. U.S. Government AccountabilityOffice in its December 2008 report on the use of tax havens by American corporations, was unable to find a satisfactory definition of a tax haven but mentioned following characteristics: • No or Nominal Taxes • Lack of effective exchange of tax information with foreign tax authorities • Lack of transparency in the operation of legislative, legal or administrative provisions • No requirement for a substantive local presence; • Self-promotion as an offshore financial center
- 4. Organization for EconomicCo-operation and Development (OECD) identified three key factors in considering whether a jurisdiction is a tax haven: • No or only nominal Tax • Protection of personal financial information • Lack of Transparency
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- 8. Base Erosion, ProfitShifting" (BEPS) refers to tactics used by Global Corporations to legally shift profits overseas to low/no Tax regions. These tactics focus mainly on leveraging gaps/mismatches in tax treaties and transfer pricing. Here is a simple graphic that illustrates how corporations use transfer pricing to shift profits overseas:
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- 11. COUNTERING HARMFUL TAX PRACTICES MORE EFFECTIVELY PREVENTING TREATYBENEFITS IN INAPPROPRIATE CIRCUMSTANCES Making Dispute Resolution Mechanism more effective Transfer Pricing Documentation and Country-by- Country Reporting
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- 13. Tax havens help richpeople hide money that should be spent on schools, hospitals, roads and other public services Tax havens force poor people to pay the taxes of the rich It widens the gap between rich and the poor Tax havens help criminals hide their loot Wall Street financier Bernie Madoff Tax havens help dictators and their cronies plunder the resources of developing countries Teodoro Nguema Obiang Tax havens corrupt markets, concealing insider dealing. The epic corruption which destroyed Enron – and hundreds of livelihoods – could not have happened without tax havens.
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- 20. •Population is approximately60,000, •100,000 companies in Cayman as a whole •World’s fifth (5th) largest financial offshore centre. •GDP composition: Agriculture - 0.3% , Industry-7.2% , Services-92.5% •No corporate estate tax, gift tax, withholding tax and inheritance tax or income tax on money earned outside of its territory including interest or dividends earned on investments •Cayman offshore companies must pay annual license fees which are based on the amount of authorized share capital that the offshore corporation has. •Only one shareholder and one director are needed for company incorporation.. • Not signed any double tax treaties with any foreign nations. •Privacy and confidentiality. Facts on Cayman Islands
- 22. • Under countryby country reporting, the multinationals would have to break their information down by country of operation – including in each tax haven – so that citizens and authorities can see what the corporations are doing in their countries.
- 23. • This wouldinvolve taxing multinational corporations according to the real economic substance of where they actually do business.
- 24. • Developing countries –and rich ones – must get the information they need to tax their wealthiest citizens properly.
- 25. Ensuring that everyhuman who has a stake in a corporate structure – a 'true beneficial’ owner – has his or her identify available on a searchable, low-cost public register. And we should slap severe sanctions on those havens that don’t shape up