he tax havens are a legal way of hiding money from the IRS. They allow people to put their wealth in offshore accounts, which don’t have to be reported on any taxes until they’re withdrawn. The United States government has been trying for years to crack down on this practice but it is very difficult due to all of the loopholes available and because there is so much money at stake. Do you want your hard-earned cash hidden away from Uncle Sam? Read more about how these places work!
Do not underestimate the power of tax havens. For years these countries have been able to supplement their economies by offering safe harbors for money that needs to be hidden away from higher government agencies. Yes, there are other benefits such as privacy but you should really consider how much financial kickback you can get from doing this and how it might benefit you.
The first anti-tax haven law was put in place in 1964 after a special commission was created by John F. Kennedy when he found out that U.S citizens were using tax havens (particularly in Switzerland) to hide assets and avoid paying taxes back home. Since then all U. S presidents have attempted to crack down on them even though most Americans continue to use these islands for tax purposes.
The most popular tax havens these days are around Caribbean islands like the Caymans and Bermuda. In fact, they are so popular that there is a growing movement to make them open up their tax codes as other countries have done in recent years. If this were to happen it would obviously affect how beneficial they are for investors looking for places to hide their assets and those who want total privacy when doing business or living (many celebrities look here).
But because of funding challenges caused by the 2008 financial crisis, many nations have begun to tighten upon how much information is shared with foreign governments including those seeking offshore accounts. Hence why Switzerland has changed its laws recently and now applies automatic exchange of information regarding bank accounts held by foreign citizens. They are also looking to adopt the Organisation for Economic Co-operation and Development (OCED) requirements starting in 2017 which will require financial institutions to report details of all accounts held by foreigners as well as local banks disclosing information about their overseas clients when requested or face penalties.
Although there are still a number of tax havens that will keep strict customer privacy and allow for total secrecy this is no longer the case with many others who now adhere to international standards set out by these intergovernmental organizations. Here’s our list of what we think are currently the best tax havens:
Seychelles remains one of those nations that has been able to maintain its status as one of the secure st tax-havens. Seychelles does not require a person to be domiciled or living in this country nor does it allow for the ownership of an offshore company by any local resident to avoid taxation on worldwide income. There are no capital gains, inheritance, sales taxes, gift taxes, or value-added taxes and there is a 0% withholding tax on interest payments made to non-residents.
The government levies certain fees such as a registration fee and annual company fee which may vary depending on the type of business being conducted but this has been kept low compared with other countries. Full corporate secrecy is maintained under political asylum laws that bar the exchange of any information between governments, although recently they have taken measures to bring these laws in line with international standards. However, companies registered in Seychelles are not allowed to conduct business in Iran.
The offshore company law was first introduced by a British colonial Act which has since been reformed several times. The current legal framework was adopted as part of the International Business Companies (IBC) Act 1998 and came into effect on 1 January 1999 where it replaced legislation dating from 1866 based on English common law. The act is modeled closely on UK company law but includes additional rules relating to tax transparency and anti-money laundering. Companies are required to maintain proper books of accounts and records for all financial transactions carried out through their branches around the world. They have to keep copies of agreements with residents who receive commission or other payments for foreign exchange services. Any transaction over the prescribed reporting limit must be reported to the registrar of companies within 30 days and to the Inland Revenue Department. Bermuda is not a tax haven as it levies no corporate tax on business profits and does not encourage tax evasion.
Cyprus is one of the world’s largest ship registries and a major center for offshoring. Almost half of the country’s GDP is from financial services, mostly offshore companies serving customers outside Cyprus; these are especially popular in Russia and Ukraine.
There is no corporation tax on profits earned by offshore businesses in Cyprus. Even if you’re not setting up an offshore company, it pays to incorporate overseas as Cyprus levies no income tax on foreign-sourced dividends or interest payments to Cypriot shareholders of offshore companies. There are personal tax breaks for people who choose this route too.
Nauru is one of the smallest nations in the world, with a tiny population of 10,311. Nevertheless, it is a thriving tax haven that offers individuals some very attractive tax reliefs. Through an offshore trust, you can pay zero income tax on your interest, dividends, and rental income from overseas sources – as long as it’s kept offshore. You can also avoid capital gains tax if you’re selling assets and investing the proceeds through an offshore trust.
If your investments are made through Nauru itself rather than via an offshore trust you’ll have to pay corporate tax of 25%.
Malta has been actively courting foreign investment for decades now and takes great pride in its reputation as a stable financial hub. When setting up a business here there is no requirement to have a physical presence in the country. You can easily sign up for an online business, make use of a bank account, and you’ll then be free to run your affairs as you please – from wherever you want.
One of the things which differentiate Malta from some other tax havens out there is that its part of the European Union. While this doesn’t mean you don’t need to pay tax here (we’re not that kind), it does afford investors with certain legal protections they wouldn’t otherwise have and opens up opportunities to trade throughout Europe without restriction or additional tariffs. This isn’t just about money either; Malta allows EU residents to own property and enjoy the freedom of movement across the region just as they would at home.
Jersey is the largest of the Channel Islands and has a population of just over 100,000. They’re technically part of Great Britain but have their own laws and tax rules. The island is well-known in the UK for providing low-tax incentives to businesses wishing to relocate from more expensive areas such as London, making it popular with US companies who want to have representation in Europe without paying additional corporate tax.
The Cayman Islands
Here’s another place that is often talked about as one of the best tax havens out there because it makes up for its lack of huge numbers by being easy to do business with. You’ll be able to visit and live amongst others from all over the world while still staying safe under British rule and enjoying similar benefits a UK citizen would. The natural beauty is another draw, so if you’re looking for a little local flavor with your tax haven then the Cayman Islands might be it!
Income tax is not required as long as residents and visitors take part in what is called ‘tax-exempt activities’ which is basically anything other than collecting interest or being involved in some way in financial investment. There’s no capital gains tax, inheritance tax, or corporate income tax, but there are taxes on goods and services that you use – including food items such as fuel and alcohol. Your money held in bank accounts isn’t subject to any of these charges either:
Luxembourg is the best tax haven in the world because there is no income tax.
Luxembourg currently has a reputation as one of the most honest and transparent countries on earth – especially when it comes to banking. The European Commission said that Luxembourg’s ‘legal system is characterized by the highest degree of legal certainty.’ Luxembourg takes its ethics very seriously and that has translated into an extremely reliable international banking center, where you can rest assured your money will be safe.
But if you don’t mind losing some sleep every once in a while then Jersey might be what you’re looking for!
Jersey may have been having a bit of trouble lately with scandals over corporate tax avoidance, but they remain one of the top destinations for companies to avoid paying UK tax on their profits.
Over 3,000 firms are registered in Jersey and many more operate there but are officially based somewhere else. Our experts cite its ‘excellent tax regime’ as the primary reason for choosing to locate a business there. If you’re looking for global expansion then Jersey is definitely one of your top destinations!
The seventh biggest tax haven in the world is The Cayman Islands. This Caribbean archipelago has been described by CNN as ‘one of the most secretive banking centers in the world’. The Tax Justice Network ranks it second only to Switzerland globally. So if you want to keep things really quiet then head over to this locale, where bank accounts tend to get lost rather than found!
Mauritius is another tax haven with a tropical climate and it boasts an impressive double tax agreement with the European Union. It seems that this is a good place to be for anyone who needs protection from the cold and rain! If you’re looking for ”, then off-shore banking services are available here too, in case your name ends up on some international list of undesirable taxpayers.
There’s no doubt that if you’re planning on setting up an elaborate offshore structure then there are many appealing destinations where this can be done easily, legally, and discreetly. But when doing so keep in mind that the penalties for failing to pay tax or breaking other laws can be severe – especially if your scheme is illegal or abusive!
Bermuda is a tax haven that offers an attractive combination of rich history and a modern professional business environment. Bermuda is also the only jurisdiction in the world that has achieved the status of ””, as certified by the Organisation for Economic Cooperation and Development (OECD).
The island offers extensive corporate vehicle options, including trusts, mutual funds, limited liability companies (LLCs), and foundations. Making use of these protections, along with privacy laws that make it difficult for foreign law enforcement authorities to get information from Bermuda’s banks or financial institutions, makes this an ideal place for international entrepreneurs to shelter their assets while they’re built up over time.
The Cayman Islands
The Cayman Islands, perhaps one of the most famous tax havens, is a British overseas territory in the Atlantic Ocean.
Incorporating there as an offshore company or international business corporation (IBC) can be done extremely quickly and with few questions asked by professionals on-site. Indeed, incorporation through a local lawyer only takes 24 hours, while setting up your own trust fund will take about 30 minutes of instruction from a specialist.
An IBC can be used to incorporate a business, purchase real estate or conduct financial transactions without being subject to taxation by the Cayman Islands government — although any foreign earned income must also still file tax returns at home.
Final Thoughts on which country is the best tax haven??
The choice is based on personal preference and the desired outcome of the tax haven. In the Cayman Islands, there is no tax on corporate income or individuals and it was ranked as the number one country to incorporate in by Forbes Magazine in 2011. However, other countries may offer better tax incentives or have lower incorporation costs so, finding the best tax haven may be a process of eliminating other countries based on personal criteria and needs.
Do you want to learn more about tax havens? Check out these Best Books on Tax Havens.