Tax havens are places where wealthy people keep money in offshore accounts for reasons especially related to tax avoidance. These people often own money in companies registered in places like the Cayman Islands and other small, low-tax jurisdictions in remote locations.
CORPNET, a corporate research group based in Amsterdam, has ranked the most important tax havens in the world based on how much money enters the country compared to how much it should depend on the size of its economy.
Most of the top tax havens are island nations such as the British Virgin Islands, Samoa, and Malta. Here is the top of tax havens made by CORPNET.
15. Seychelles
Formerly a colony of the United Kingdom, Seychelles is an archipelago of islands in the Indian Ocean. Seychelles was blacklisted in the EU as a tax haven in 2015 but was later moved to the "gray list" after making some tax reform commitments.
14. Cyprus
Cyprus is investigating several corruption allegations related to its "golden passport" program, which offers citizenship to foreigners who invest at least $ 2.2 million in real estate or local businesses.
13. Nauru
Nauru, a Pacific island in northeastern Australia, is the smallest independent republic in the world, with a population of less than 10,000. In 2001, the country was blacklisted internationally, with suspicions that it had become a money-laundering center. The Organization for Economic Co-operation and Development (OECD) announced in 2017 that Nauru is making progress on fiscal transparency.
12. Luxembourg
Luxembourg is one of the richest countries in the world, largely due to its financial sector, which accounts for 35% of its GDP. Since 2002, the Luxembourg government has implemented several policies aimed at attracting foreign direct investment. But Luxembourg has lost some favorable tax advantages in recent years, following pressure from the EU and the OECD.
11. Mauritius
Mauritius, an island country on the southeast coast of Africa with a population of about 1.4 million, is home to more than 32,000 offshore entities. It encouraged foreign investment as early as the late 1980s and early 1990s when it adopted the Mauritius Offshore Business Act. This allowed the incorporation of foreign entities with low financial information and extremely low taxation. Mauritius was one of 30 countries registered as a tax haven by the EU in 2015, but the EU removed it from the list in October 2019.
10. Malta
Malta is an archipelago in the Mediterranean Sea south of Italy, with a population of about 450,000. According to the BBC, Maltese companies pay the lowest profit tax of any EU country. Local businesses pay a 35% profit tax, but foreign corporations pay up to 5%.
09. Marshall Islands
The Marshall Islands, a chain of islands in the central Pacific between Hawaii and the Philippines, was under US administration for nearly 40 years before gaining independence in 1986.
The island nation of about 76,000 people was one among the countries on the blacklist of tax havens in 2015. But the EU decided in 2019 to remove it from this list after the administration decided to outlaw companies created to avoid paying tax contributions and are made under false identities.
8. Curacao
Curacao, a Dutch island in the Caribbean, is known as an offshore financial center. In 2017, it was put on the EU's "gray list," It was shown that it needed to improve its fiscal policy to comply with EU transparency regulations.
7. Liechtenstein
Liechtenstein, one of the few mainland countries on the list, has a thriving financial services sector and one of the world's highest per capita income levels. According to the EU, it also served as a tax haven and was blacklisted in 2015. Liechtenstein has agreed to take some measures to prevent tax evasion but still has one of the lowest corporate tax rates in Europe and the world.
6. Samoa
In 2015, the island state of the South Pacific ranked first in the top of the most secretive nations in the world when it comes to keeping information of people who own companies and money in this country. Samoa is also on the EU's blacklist of global tax-havens.
5. The Cayman Islands
The Cayman Islands is one of the most famous tax havens in the world because it has no profit tax, no personal income tax, and no capital gains tax. In October 2019, the Cayman Islands promised to reveal the identities of each person who owns a company there by 2023.
4. Bermuda
The British island's economy, which is home to about 71,000 people, is mainly based on insurance and other financial services. In 2016, Oxfam ranked Bermuda first in the top of tax havens and was one of the 30 countries registered as a tax haven by the EU in 2015.
3. Jersey
Jersey, one of the Channel Islands between England and France, has a reputation as a tax haven since the very wealthy British began moving there and transferring their money to the island in the 1920s to take advantage of its lack of taxes on wealth and inheritance.
2. Taiwan
Taiwan is a disputed nation between China, which claims it as one of its territories, and local authorities, which see itself as an independent democracy that supports human rights issues. The EU called Taiwan a potential tax haven in 2017, but it was blacklisted in 2019 after it pledged to reform its tax system.
1. The British Virgin Islands
The world's main tax haven, the British Virgin Islands, has more than 5,000 times more money than the value of its economy. In 2017, British Virgin Islands officials released a report claiming that British territory is not a tax haven but a strong contributor to the global economy and a facilitator of international trade and investment.
The EU has given the British Virgin Islands until the end of 2019 to adopt tax reforms to avoid the 2020 blacklist of tax havens.
