The document discusses tax havens and strategies used by multinational corporations to shift profits to low/no tax jurisdictions. It defines tax havens and lists their key characteristics according to organizations like the OECD and GAO. Common tactics to shift profits, like transfer pricing, are illustrated. The OECD's BEPS action plan to address these issues is also mentioned. The role of tax havens in enabling tax avoidance, corruption, and inequality is debated. Details on the Cayman Islands, a prominent tax haven, are provided. Strategies proposed to increase transparency and prevent profit shifting include country-by-country reporting and establishing public registers of true beneficial owners.

1. By: Achal Arora
Akash Gholap
Alka
Mitul Panchal
Utkristha Somani
Shri Ram College of Commerce- Global Business
Operations (2017-19)

2. “Tax Havens are low-jurisdictions that
provide companies, investors and
individuals opportunities for tax
avoidance and evasion.”

3. U.S. Government Accountability Office 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 Economic Co-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

6. INCORPORATION
FEE
RENEWAL
FEE
CUSTOM &
IMPORT DUTIES
DEPARTURE
TAXES
LICENSE FEE

8. Base Erosion, Profit Shifting" (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:

10. OECD
UN
G20
Automatic
Exchange Of
Information
Beneficial
Ownership
BEPS Action
Plan

11. COUNTERING
HARMFUL TAX
PRACTICES MORE
EFFECTIVELY
PREVENTING
TREATY BENEFITS
IN
INAPPROPRIATE
CIRCUMSTANCES
Making Dispute
Resolution
Mechanism more
effective
Transfer Pricing
Documentation
and Country-by-
Country
Reporting

12. YES NO

13. Tax havens help
rich people 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.

15. CONSULT
A LAW FIRM

17. John Doe +

19. CAYMAN
ISLANDS

20. •Population is approximately 60,000,
•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 country by 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 would involve
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 every human
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