Tax havens are countries which have effectively low or no rate of particular tax or taxes. Their financial secrecy laws are quite strict. The best thing of tax havens is that one doesn’t need to stay there to get benefit from their policies. Once the money is invested there, one gets benefit from their policies. Besides tax saving, financial secrecy is also a thing that attracts investers and businesses. Country with high secrecy and high taxation is also known as tax haven, though not much universally. Low taxation and less secrecy tax havens are universally known and are in most of the lists of tax havens.
This is how tax haven country work. Tax haven countries encourage industry and investment. Individuals prefer higher secrecy to invest their money. Individuals keep their money in such country’s banks and financial institutes. Countries get so much invesments, that these banks could lend money to other countries. Like any other banks,these banks of tax haven invest in several stocks, shares, bonds, (probably of their own country), etc. Income from the interest of loans and bank investments is good enough.
Businesses decide where they want to invest as every tax haven offer different tax concession. Even though company doesn’t have to pay or pay quite little amount of tax, they need to follow strict rules of the country. Companies are not supposed to exploit their employees, country’s natural resourses, etc. Companies are suppose to work for their employees’ welfare. Tax havens encourage industry to make development which could benefit them as well as country.
Because of their attractive tax rates, tax haven countries tend to attract capital. Due to that, non tax haven countries face loss of tax revenue. Several individuals and businesses invest in tax havens to save their tax. To avoid that, countries make several tax treaties which could be beneficial for both countries.
Most of the tax haven countries are known to have most successful and wel-governed economies in world. E.g. Switzerland has a very stable economy. According to Swiss Laws, bank does't have permision to share their clients’ information to anyone. It’s considered as a crime. Recently, due to pressure from European Union and USA, Swiss government have to provide information of American and European Swiss bank account holders to respective countries. However, Switzerland is on the top in the Financial Secrecy Index of 2018.
There are many small countries in Caribbean Sea and Europe which are tax haven and they have a very good economy. There are several countries in the world which don’t have anything that could attract money. So instead of increasing taxes and making citizens’ life horrible, countries become tax haven, make themselves trustworthy and attract much more money…
This is how tax haven country work. Tax haven countries encourage industry and investment. Individuals prefer higher secrecy to invest their money. Individuals keep their money in such country’s banks and financial institutes. Countries get so much invesments, that these banks could lend money to other countries. Like any other banks,these banks of tax haven invest in several stocks, shares, bonds, (probably of their own country), etc. Income from the interest of loans and bank investments is good enough.
Businesses decide where they want to invest as every tax haven offer different tax concession. Even though company doesn’t have to pay or pay quite little amount of tax, they need to follow strict rules of the country. Companies are not supposed to exploit their employees, country’s natural resourses, etc. Companies are suppose to work for their employees’ welfare. Tax havens encourage industry to make development which could benefit them as well as country.
Because of their attractive tax rates, tax haven countries tend to attract capital. Due to that, non tax haven countries face loss of tax revenue. Several individuals and businesses invest in tax havens to save their tax. To avoid that, countries make several tax treaties which could be beneficial for both countries.
Most of the tax haven countries are known to have most successful and wel-governed economies in world. E.g. Switzerland has a very stable economy. According to Swiss Laws, bank does't have permision to share their clients’ information to anyone. It’s considered as a crime. Recently, due to pressure from European Union and USA, Swiss government have to provide information of American and European Swiss bank account holders to respective countries. However, Switzerland is on the top in the Financial Secrecy Index of 2018.
There are many small countries in Caribbean Sea and Europe which are tax haven and they have a very good economy. There are several countries in the world which don’t have anything that could attract money. So instead of increasing taxes and making citizens’ life horrible, countries become tax haven, make themselves trustworthy and attract much more money…
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