We have all heard of tax havens. To? Ordinary mortals? It sounds like something far away to which only the richest go, to evade taxes, or as the place where the mafias put their money safely. But the truth is that some are closer than we think and that the damage they do to the world economy is very great.
A tax haven is a small country or territory with policies aimed at attracting foreign investment through tax incentives and very flexible legislation.
In them, anyone can leave their money anonymously, avoiding a tax burden in their place of residence, while watching their investments increase.
The European Union makes a classification dividing them into “classic tax havens”, those with high taxation that offer tax advantages to people or entities that carry out their activities abroad, and territories that have highly developed service centers.
Benefits: tax exemption
Among the benefits they provide is an exemption from taxes on interest earned on bank accounts, dividends from shares, as well as other financial assets.
Neither do you have to pay taxes for increases in equity, or for any commercial activity.
They have political and economic stability, as well as good communications and the absence of international double taxation agreements. In other words, the exchange of information with these countries cannot take place.
In addition, they have the advantage that these places do not care where the money comes from, but rather the fact that it ends up in their territories, since, in this way, it helps them to develop economically and that their inhabitants have a higher quality. of life.
48 tax havens
There are 48 tax havens in the world. In Europe there are no less than ten and of the other 38, 20 in America, three in Africa, another ten in Asia and five in Oceania.
According to Attac, the international movement of citizens for the democratic control of financial markets and their institutions, half of the world trade passes through tax havens, accounting for 3% of world GDP. The value of the assets deposited in them reaches up to 11 trillion dollars. The losses that this generates in developing countries reach 50,000 million dollars.
Each year, more than 150,000 companies are created, domiciled in financial centers that do not require residency.
Only in 1999, Spanish investment in tax havens amounted to almost 2.5% of total Spanish foreign investment according to the Secretary of State for Trade and Tourism of the Ministry of Economy.
Most of this money went to the Cayman Islands, the Virgin Islands, the Netherlands Antilles, Panama, and the Channel Islands.
On the other hand, from 1997 to 2003, some 15,000 million euros were invested in offshore companies constituted by 19 Spanish banks and savings banks in tax havens, according to ATTAC, in the Cayman Islands, Jersey, as well as in other tax havens.
Another fact to take into account is that ICTs make it possible for “black money” to be transferred from one place to another with greater speed and impunity.
Ways to use it
The way to use a tax haven differs depending on whether the person doing it is a natural or legal person. Thus, natural persons, especially those with greater capital, can enjoy the tax requirements although they normally have to reside in the country. However, in some, it is not necessary.
Total exemption from taxation for the income and capital gains obtained is not always achieved, but a low tax rate is achieved.
It is also used to plan inheritances or bequests and thus avoid double taxation by inheritance.
Regarding the companies, they take advantage of not being subject to tax on profits obtained by companies incorporated in those countries, or on the dividends, they receive from subsidiaries, total freedom of movement for capital and the absence of exchange control.
Types of companies that operate
The companies that most operate in these places do so as commercial companies registered under the laws of these tax havens, better known as offshore companies. Their constitution is very simple and they are used above all to carry out export-related activities.
Holding company: It allows the taxation of dividends to be deferred until they are transferred to the country of residence of the parent company. If the country in which the holding company was created does not record the dividends, they will not be taxed, as long as they are reinvested abroad.
The Netherlands does not have any special regime for this type of company.
Internal financial companies: To reduce their financial costs they use disintermediation, that is, to issue loans directly in the financial markets, without going through the banks. The countries chosen for this modality are usually also the Netherlands.
Captive reinsurance companies: These are operations in which the main insurer discharges all or part of the risks of his position on the reinsured. They are intended to reduce the cost of insurance premiums for the business group. The privileged areas in this regard are the Bermuda Islands and the island of Guernsey. Trademark and patent companies: When international groups delegate their know-how, patents, etc., to a specialized subsidiary, in order to ensure their legal protection and an improvement in the tax field. The Netherlands is the ideal country for this type of company.
All this means that countries have to compete to attract capital back to their territories and that economic growth slows. The tax burden shifts from the rich to the poor. And all this is especially detrimental for developing countries since it impedes their growth in a much more serious way than developed countries and nullifies economic growth.
Most frequent operations
In addition to using them to escape the appointment with the treasury of their different countries, it also serves to relocate investments through circular systems.
These offshoring systems make the income or the capital gain obtained in the operations remain outside the tax power of the country of residence of the person who is carrying out the operation.
Another of the most frequent operations is to convert the income obtained into capital gains, which have a lower tax rate or do not even have to pay it if a certain number of years has elapsed.
Tax havens by continents
Europe: Isle of Man, Isle of Guernsey and Jersey, the Principality of Andorra, Gibraltar, the Grand Duchy of Luxembourg, the Principality of Liechtenstein, the Principality of Monaco, the Republic of San Marino, the Republic of Malta and that of Cyprus.
America: Anguilla, Antigua and Barbuda, the Bahamas, Bermuda, Cayman Islands, Netherlands Antilles, Aruba, Republic of Dominica, Grenada, Jamaica, Montserrat, Saint Vincent and the Grenadines, Saint Lucia, Trinidad and Tobago, British Virgin Islands, Islands Virgin of the USA, Republic of Panama, Turks and Caicos Islands and the Falkland Islands.
· Africa: the Republic of Liberia, Republic of Seychelles and Mauritius.
· Asia: the Lebanese Republic, the Jordanian Hashemite Kingdom, the Emirate of Bahreim, the United Arab Emirates, the Sultanate of Oman, Macao, Hong Kong, the Republic of Singapore, the Sultanate of Brunei and the Mariana Islands.
Oceania: Republic of Nauru, Solomon Islands, Republic of Vanuatu, Fiji Islands and Cook Islands.