Tax Haven

The OECD uses four key factors to define a tax haven: a tax regime that imposes no or low effective tax rates on income from geographically mobile financial and other service activities; a regime that is ring-fenced from the domestic economy; a regime that lacks transparency (e.g. details of the regime or its application are not apparent, or there is inadequate regulatory supervision or financial disclosure); and there is no effective exchange of information with respect to the regime. According to estimates, tax havens cost governments between US$500 billion and US$600 billion per year in lost corporate tax revenue, while individuals avoid paying US$200 billion per year in tax. Tax havens are not merely found in offshore financial centres on tropical Caribbean or Indian Ocean island states but are found throughout the world, including in OECD/advanced economies