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Tax Engineering

What is a tax haven?


Question

What is a tax haven? Is it legal?

Answer

A tax haven is a country with a tax-free regime applied to companies and individuals that are not tax residents in this same country. Tax havens have favorable laws to encourage investments offering opacity and easiness to invest. 

Tax havens can be seen from two points of view: 

  1. The first opinion is from the point of view of high taxation countries that have a moralistic and hypocritical opinion criticizing tax havens. However, the same experts don’t dare to criticize such countries like the United States where we can find states like Delaware with a tax saving regime for companies registered in this American state and where Greater 500 Wall Street companies have their representative office to eliminate their taxes considerably. In the case of the United Kingdom and most of its colonies, such as Gibraltar, Cayman, Jersey, the favorable laws for tax elimination are consented by the United Kingdom allowing these tax havens to operate all over the world. 
  2. The other point of view goes in favor of tax havens since the main source of income for these territories are tourism, finance and they have no other form of income because of the few resources that these countries have. Tax havens defend its use and the advantages it can offer to individuals and companies to conduct business legally in any country in the world.


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