Are tax havens in crisis?

  • Posted By : Admin
  • February 25, 2018
  • Tax havens
  • 0 Comments

Are tax havens in crisis? Are they losing popularity or more and more hat havens re-emerge? If we pay attention to the media of communication and hear the promises that high-tax countries make with the eradication of tax havens, we could say yes, but the scenario is totally different. The number of tax havens does not decrease but is increasing. Therefore the topic that offshore jurisdictions are in crisis is totally false. Many countries in Africa, for example, Liberia seeing that their natural resources are disappearing or are in the hands of countries of high taxation. Therefore, to be able to favor foreign investment they create investment programs to avoid paying taxes.

These new tax havens are adapting to the external pressures of high tax countries have even learned to coexist with the regulations to be eradicated. 

The OECD proposed a blacklist of tax havens to identify which countries were fulfilling their obligations and which countries should modify their tax laws. In order to get eliminated from the blacklist the OECD the tax havens had to sign at least 10 tax information treaties with other countries. As a result the tax havens signed tax information treaties with each other, a clear example, Cayman Islands signing tax information treaties with Jersey, Isle of Man, Jamaica or Panama among others. In this way these country got eliminated from the blacklist and received the approval of the international community. 

Currently there are countries that have left the black lists imposed by the OECD but follow the same scheme as 20 years ago: zero taxation, banking secrecy and an armored judicial system to protect the interests of the clients. 

Euro tax havens 

The international community closes its eyes with the euro tax havens, countries such as Cyprus, Malta, Ireland, Switzerland or Luxembourg and/or dependent countries of the United Kingdom such as Isle of Man, Jersey, Gibraltar. They can operate throughout the European Union without any restriction by having signed tax information agreements with a very small number of high taxation countries. The euro tax havens dependent on the United Kingdom have the same nature as the countries that are located in the Caribbean, such as Cayman Islands, Turk & Caicos, Bermuda, no taxes, banks with banking secrecy and commercial opacity. 

Strengthened judicial system 

The tax havens that are on the blacklists have a more reinforced judicial system than the countries of high taxation. The main obstacle that exists between the offshore jurisdictions and the jurisdictions of high taxation (onshore) is that tax havens are not contemplated as a crime evasion of taxes since the investor has a status of "NON-RESIDENT" and therefore it is not mandatory to file taxes. Offshore tax havens have developed a good judicial system shielded by laws for which you do not have to pay taxes for being non-resident

Are tax havens in crisis? The answer would be simple: No, and their number is increasing. Are they losing popularity? No, the media of communication and high tax countries are helping to adapt and not lose their popularity. Are more tax havens re-emerging? Yes, due to the financial globalization that we are suffering many countries are changing their judicial model and their tax laws for non-residents.