What is a tax haven? It is a country which slashes down the tax liabilities of individuals and businesses. There’s more to it than what you see in the fictional legal thrillers about the world of shell companies, offshore accounts and tax havens. Offshore countries or territories are those places where the taxes are determined at either a low or a non-existent rate. There are several US-based MNCs which play a pivotal role in this tax-haven drama. The 2016 report by Citizens for Tax Justice, 370 companies from the Fortuna 500 list operate their subsidiaries in different tax haven nations all over the country. Scroll down to know more on the few tax havens which allow you to pay less on your annual tax bill.
Among the Fortune 500 list, the most revered tax haven is Netherlands and more than half of the Fortune 500 reports having at least one subsidiary in Netherlands. If you even take into account Oxfam’s list of the worst tax havens in the world, they place this country at No. 3! One tax incentive in Netherlands cost around 1.3 billion euros in 2016. This is equal to 8% of what Netherlands generates in the form of total income from corporation tax.
Bermuda has acquired the debatable distinction of Rank 1 on Oxfam’s list of the worst corporate tax haven in the world. Bermuda offers a 0% rate on corporate tax and no rate on personal income taxes. As there are no taxes levied on corporate transactions, the American multinational companies have accumulated a heavy amount of money in Bermuda (recorded profits being at $80 billion in the year 2012). This amount even surpassed their profits that were reported in China, Japan, Germany, and France (combined).
- Cayman Islands
The Cayman Islands provide the biggest tax loophole currently for individuals and the multinational corporations. The Cayman Islands take the second place on Oxfam’s list of the worst tax havens. The Caymans and different other nations have laws which let a corporation to be built and retain assets without the necessity of having to pay any taxes. When held for commercial reasons, this is totally legal and it isn’t any strategy to avoid taxes.
The once British colony is a rather small sovereign city and for specific reasons, it has now become the hub of MNC subsidiaries. Following Luxembourg and Netherlands, Singapore to has nominal corporate tax rates, as per Oxfam. Even then Singapore is a nation which still deserves to be listed at the top of the nations which are considered as the best tax havens in the world.
You must have heard of the destination Mauritius whenever you spoke of couple vacations. It is an island which is perched in the Indian Ocean and it lies few miles east of Madagascar. Mauritius is not only the dream destination for newly married couples but it is also one of the most famous gateways for foreign investments, especially those that are directed towards India. Few of the mega-companies which have their subsidiaries in Mauritius are Goldman Sachs, JPMorgan Chase, Morgan Stanley, Pepsi and Citigroup. With nominal corporate tax and almost no withholding tax, it is one of the favorites for MNCs.