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A 'tax haven' is a place where certain taxes are levied at a low rate or not at all. This encourages wealthy individuals and/or firms to establish themselves in areas that would otherwise be overlooked. Different jurisdictions tend to be havens for different types of taxes, and for different categories of people and/or companies.
Different definitions of tax havens exist. ''The Economist'' has tentatively adopted the description by Colin Powell (former Economic Adviser to Jersey): "What ... identifies an area as a tax haven is the existence of a composite tax structure established deliberately to take advantage of, and exploit, a worldwide demand for opportunities to engage in tax avoidance." ''The Economist'' points out that this definition would still exclude a number of jurisdictions traditionally thought of as tax havens.^[1]
The Organisation for Economic Co-operation and Development (OECD) identifies three key factors in considering whether a jurisdiction is a tax haven:
#No or only nominal taxes. Tax havens impose no or only nominal taxes (generally or in special circumstances) and offer themselves, or are perceived to offer themselves, as a place to be used by non-residents to escape tax in their country of residence.

#Lack of effective exchange of information. Tax havens typically have laws or administrative practices under which businesses and individuals can benefit from strict secrecy rules and other protections against scrutiny by tax authorities. This prevents the effective exchange of information about taxpayers who are benefiting from the low tax jurisdiction.
#Lack of transparency. A lack of transparency in the operation of the legislative, legal or administrative provisions is another factor used to identify tax havens. The OECD is concerned that laws should be applied openly and consistently, and that information needed by tax authorities to determine a taxpayer’s situation is available. Lack of transparency in one country can make it difficult, if not impossible, for other tax authorities to apply their laws effectively and fairly. ‘Secret rulings’, negotiated tax rates, or other practices that fail to apply the law openly and consistently are examples of a lack of transparency. Inadequate regulatory supervision or a government’s lack of legal access to financial records are contributing factors.
However the OECD found that its definition caught certain aspects of its members' tax systems (most developed countries have low or zero taxes for certain favoured groups). Its later work has therefore focused on the single aspect of information exchange. This is generally thought to be an inadequate definition of a tax haven, but is politically expedient because it includes the small tax havens (with little power in the international political arena) but exempts the powerful countries with tax haven aspects such as the USA and UK.
In deciding whether or not a jurisdiction is a tax haven, the first factor to look at is whether there are no or nominal taxes. If this is the case, the other two factors – whether or not there is a lack of effective exchange of information and transparency – must be analysed. Having no or nominal taxes is not sufficient, by itself, to characterise a jurisdiction as a tax haven. The OECD recognises that every jurisdiction has a right to determine whether to impose direct taxes and, if so, to determine the appropriate tax rate.

Contents

Origins

Developments

Failures

Methodology

Anti-avoidance

Incentives

Examples

Amounts

Modern developments

See also

Notes

Further reading

External links

Origins

The use of differing tax laws between two or more countries to try and mitigate tax liability is probably as old as taxation itself. It is sometimes suggested that the practice first reached prominence relating to the use (or avoidance of) the Cinque ports and later the staple ports in the twefth and fourteenth centuries respectively. Others suggest that the Hanseatic League first embraced the concept of tax competition as early as 1241, while others argue that the tax status of the Vatican City was the earliest example of a tax haven (the first Papal States being recognised in 756).
Various countries claim to be the oldest tax haven in the world; the Channel Islands claim tax independence dating from the Norman Conquest, and the Isle of Man can trace its fiscal independence to even earlier times. Nonetheless, the modern concept of a tax haven is generally accepted to have emerged at an uncertain point in the immediate aftermath of World War I.^[2] Bermuda sometimes optimistically claims to have been the first tax haven based upon the creation of the first offshore companies legislation in 1935 by the newly created law firm of Conyers Dill & Pearman.^[3] However, the Bermudian claim is debatable when compared against the enactment of a Trust Law by Liechtenstein in 1926 to attract offshore capital.^[4]
Most commentators suggest that the first true tax haven was Switzerland, followed closely by Liechtenstein.^[5] During the early part of the twentieth century, Swiss banks had long been a ''capital haven'' for people fleeing social upheaval in Russia, Germany, South America and elsewhere. However, in the years immediately following World War I, many European governments raised taxes sharply to help pay for reconstruction. Switzerland, having remained neutral, avoided these costs and was able to keep taxes low, leading to an inflow of capital for purely tax related reasons. Nonetheless, it is difficult to point to a single event or date which constituted the emergence of the modern tax haven.

Developments

The use of modern tax havens has gone through several phases of development subsequent to the interwar period. From the 1920s to the 1950s, tax havens were usually referenced as the avoidance of personal taxation. The terminology was often used with reference to countries to which a person could retire and mitigate their post retirement tax position.^[6] However, from the 1950s onwards, there was significant growth in the use of tax havens by corporate groups to mitigate their global tax burden. This strategy generally relied upon there being a double taxation treaty between a large jurisdiction with a high tax burden (that the company would otherwise be subject to), and a smaller jurisdiction with a low tax burden (which, by structuring the group ownership through the smaller jurisdiction, they could take advantage of the double taxation treaty and pay taxes at the much lower rate). Although some of these double tax treaties survive,^[7] in the 1970s, most major countries began repealing their double taxation treaties with micro-states to prevent corporate tax leakage in this manner.
In the early to mid-1980s, most tax havens changed the focus of their legislation to create corporate vehicles which were "ring-fenced" and exempt from local taxation (although they usually could not trade locally either). These vehicles were usually called "exempt companies" or "International Business Corporations". However, in the late 1990s and early 2000s, the OECD began a series of initiatives aimed at tax havens to curb the abuse of what the OECD referred to as "unfair tax competition". Under pressure from the OECD, most major tax havens repealed their laws permitting these ring-fenced vehicles to be incorporated, but concurrently they amended their tax laws so that a company which did not actually trade within the jurisdiction would not accrue any local tax liability.^[8]

Failures

Although tax havens are traditionally linked with images of prosperity,^[9] there have also been notable failures.

★ Beirut formerly enjoyed a reputation as the only tax haven in the Middle East. However, its reputation took a severe dent after the Intra Bank crash of 1966,^[10] and the subsequent political and military deterioration of Lebanon destroyed any notion of the necessary stability for a successful tax haven.

★ Liberia enjoyed a prosperous ship registration industry. The fact that the ship registration business still continues is partly a testament to its early success, and partly a testament to moving the national Shipping Registry to New York City, but the series of violent and bloody civil wars in the 1990s and early 2000s severely damaged confidence in the jurisdiction.

★ Monaco is still regarded as a tax haven, in 1963 it surrendered to French demands to align its tax system with France in relation to French companies and French individuals. However, non-French citizens and companies can still enjoy zero taxation regime by moving to Monaco.

★ Tangier enjoyed a brief but colourful existence as a tax haven in the period between the end of effective control by the Spanish in 1945 until it was formally reunited with Morocco in 1956.

★ A number of Pacific based tax havens have literally closed up shop (although not formally) in response to OECD demands for better regulation and transparency in the late 1990s.

Methodology

At the risk of gross oversimplification, it can be said that the advantages of tax havens are viewed in four principle contexts:^[11]

★ 'Personal residency.' Since the early twentieth century, wealthy individuals from high-tax jurisdictions have sought to relocate themselves in low-tax jurisdictions. In most countries in the world, residence is the primary basis of taxation. In some cases the low-tax jurisdictions levy no, or only very low, income tax. But almost no tax haven assesses any kind of capital gains tax, or inheritance tax. Individuals who are unable to return to a high-tax country in which they used to reside for more than a few days a year are sometimes referred to as tax exiles.

★ 'Asset holding.' Asset holding involves utilising a trust or a company, or a trust owning a company. The company or trust will be formed in one tax haven, and will usually be administered and resident in another. The function is to hold assets, which may consist of a portfolio of investments under management, trading companies or groups, physical assets such as real estate or valuable chattels. The essence of such arrangements is that by changing the ownership of the assets into an entity which is not resident in the high-tax jurisdiction, they cease to be taxable in that jurisdiction. Often the mechanism is employed to avoid a specific tax. For example, a wealthy testator could transfer his house into an offshore company; he can then settle the shares of the company on trust for himself for life, and then to his daughter. On his death, the shares will automatically vest in the daughter, who thereby acquires the house, without the house having to go through probate and being assessed with inheritance tax.^[12]

★ 'Trading and other business activity.' Many businesses which do not require a specific geographical location or extensive labour are set up in tax havens, to minimise tax exposure. Perhaps the best illustration of this is the number of reinsurance companies which have migrated to Bermuda over the years. Other examples include internet based services and group finance companies. In the 1970s and 1980s corporate groups were known to form offshore entities for the purposes of "reinvoicing". These reinvoicing companies simply made a margin without performing any economic function, but as the margin arose in a tax free jurisdiction, it allowed the group to "skim" profits from the high-tax jurisdiction. Most sophisticated tax codes now prevent transfer pricing scams of this nature.

★ 'Financial intermediaries.' Much of the economic activity in tax havens today consists of professional financial services such as mutual funds, banking, life insurance and pensions. Generally the funds are deposited with the intermediary in the low-tax jurisdiction, and the intermediary then on-lends or invests the money (often back into a high-tax jurisdiction). Although such systems do not normally avoid tax in the principal customer's jurisdiction, it enables financial service providers to provide multi-jurisdictional products without adding an additional layer of taxation. This has proved particularly successful in the area of offshore funds.^[13]

Anti-avoidance

Many high tax jurisdictions have enacted legislation to counter the tax sheltering potential of tax havens. Generally, such legislation tends to operate in one of five ways:
# attributing the income and gains of the company or trust in the tax haven to a taxpayer in the high-tax jurisdiction on an arising basis. Controlled Foreign Corporation legislation is probably the best example of this.
# transfer pricing rules, standardisation of which has been greatly helped by the promulgation of OECD guidelines.
# restrictions on deductibility, or imposition of a withholding tax when payments are made to offshore recipients.
# taxation of receipts from the entity in the tax haven, sometimes enhanced by notional interest to reflect the element of deferred payment. The EU withholding tax is probably the best example of this.
# exit charges, or taxing of unrealised capital gains when an individual, trust or company emigrates.
However, many jurisdictions employ blunter rules. For example, in France securities regulations are such that it is not possible to have a public bond issue through a company incorporated in a tax haven.^[14]
Also becoming increasingly popular is "forced disclosure" of tax mitigation schemes. Broadly, these involve the revenue authorities compelling tax advisors to reveal details of the scheme, so that the loopholes can be closed during the following tax year, usually by one of the five methods indicated above.^[15] Although not specifically aimed at tax havens, given that so many tax mitigation schemes involve the use of offshore structures, the effect is much the same.

Incentives

There are several reasons for a nation to become a tax haven. Some nations may find they do not need to charge as much as some industrialised countries in order for them to be earning sufficient income for their annual budgets. Some may offer a lower tax rate to larger corporations, in exchange for the companies locating a division of their parent company in the host country and employing some of the local population. Other domiciles find this is a way to encourage conglomerates from industrialised nations to transfer needed skills to the local population. Still yet, some countries simply find it costly to compete in many other sectors with industrialised nations and have found a low tax rate mixed with a little self-promotion can go a long way to lure companies to their domiciles.
Many industrialised countries claim that tax havens act unfairly by reducing tax revenue which would otherwise be theirs. Various pressure groups also claim that money launderers also use tax havens extensively,^[16] although extensive financial and KYC regulations in tax havens can actually make money laundering more difficult than in large onshore financial centers with significantly higher volumes of transactions, such as New York City or London.^[17] In 2000 the Financial Action Task Force published what came to be known as the "FATF Blacklist" of countries which were perceived to be uncooperative in relation to money laundering; although several tax havens have appeared on the list from time to time (including key jurisdictions such as the Cayman Islands, Bahamas and Liechtenstein), no offshore jurisdictions appear on the list at this time.

Examples

★ Andorra. No personal income tax. ★ Anguilla - A British Colony and offshore banking center ★ Antigua and Barbuda ★ Aruba ★ The Bahamas levies neither personal income nor capital gains tax, nor are there inheritance taxes. ★ Barbados - A 'Low-tax regime' not 'Tax haven'.[18][19][20] - The government of Barbados sent off a high level note to members of the United States Congress recently in protest of the label "Tax Haven" stating it has the potential to undermine or override the Barbados/United States double taxation agreement.[21] ★ Belize ★ Bermuda does not levy income tax on foreign earnings, and allows foreign companies to incorporate there under an "exempt" status. Exempt companies may not hold real estate in Bermuda or trade there, nor may they be involved in banking, insurance, assurance, reinsurance, fund management or similar business, such as investment advice, without a license. The island also maintains a stable, clean reputation in the business world. At present, there are no benefits for individuals. In fact, for a non-Bermudian to own a house on the island, they would have to pay a minimum of $15,000 a year in land tax alone. ★ Bosnia and Herzegovina - Republika Srpska entity of Bosnia and Herzegovina levies 10 % profit tax ★ British Virgin Islands: the 2000 KPMG report to the United Kingdom government indicated that the British Virgin Islands was the domicile for approximately 41% of the world's offshore companies, making it by some distance the largest offshore jurisdiction in the world by volume of incorporations. The British Virgin Islands has, so far, avoided the scandals which have tainted less well regulated offshore jurisdictions. ★ Bulgaria - corporate taxes 10 % since 2007.01.01, dividends - 7 % ★ Campione d'Italia an Italian enclave within Switzerland ★ Cayman Islands ★ In the Channel Islands, no tax is paid by corporations or individuals on foreign income and gains. Non-residents are not taxed on local income. Local taxation is at a fixed rate of 20% in Jersey, Guernsey, & Alderney and 0% in Sark. ★ Cook Islands ★ Cyprus: this jurisdiction has grown recently in popularity and anticipates further future growth. As a jurisdiction Cyprus is in a position to exploit its unusual position as an offshore jurisdiction which is within the EU. ★ Dubai ★ Gibraltar ★ Hong Kong's tax rates are so low that it can be considered a tax haven.[22] ★ Ireland did not tax the foreign income of authors and artists until 2006. Corporation tax is only 10% or 12.5%. Income not remitted to Ireland by Irish residents not-domiciled in either Ireland or the UK can escape taxation Ireland. ★ The Isle of Man does not charge corporation tax, capital gains tax, inheritance tax or wealth tax. Personal income tax is levied at 18% on the worldwide income of Isle of Man residents, up to a maximum tax liability of £100,000. Banking income tax is levied on the profits of Isle of Man based banks at 10%. ★ Liechtenstein ★ Luxembourg

★ Macau ★ Malta - Shareholders of certain companies pay less than 5% tax ★ Mauritius-based front companies of foreign investors are used to avoid paying taxes in India utilising loopholes in the bilateral agreement on double taxation between the two countries, with the tacit support of the Indian government, who are keen to improve figures relating to inward investment. The use of Mauritius as a gateway to funnel foreign investments into India has always been controversial. Mauritius's financial regime has a number of the key characteristics of a tax haven, which has helped to facilitate this.[23] ★ Macedonia - corporate taxes 10 % since 2008 (now 12 %), income taxes 10 % since 2008 (now 12 %), tax on reinvestment profit 0 % ★ Monaco does not levy a personal income tax. ★ Nauru - No taxes. Only tax in country is an airport departure tax. ★ Netherlands Antilles ★ Nevis ★ New Zealand does not tax foreign income derived by NZ trusts settled by foreigners of which foreign residents are the beneficiaries. Nor does it tax the foreign income of new residents for four years.[1] ★ Norfolk Island - no personal income tax. ★ Panama ★ Russia - 11% income tax ★ Samoa ★ San Marino ★ Sark ★ Seychelles ★ St Kitts and Nevis ★ St Vincent and the Grenadines ★ Switzerland is a tax haven for foreigners who become resident after negotiating the amount of their income subject to taxation with the canton in which they intend to live. Typically taxable income is assumed to be five times the accommodation rental paid. Vaud is the most popular canton for this scheme. For businesses, the canton of Zug is popular, with over 6000 holding companies. ★ Turks and Caicos Islands ★ The UK is a tax haven for people of foreign domicile, even if they are UK resident (''residence'' and ''domicile'' being separate legal concepts in the UK), in that they pay no tax on foreign income so long as it is not remitted to the UK. ★ Some states within the United States, particularly Delaware, offer incentives for businesses to locate there. Many banks and other financial companies are domiciled in the state of Delaware even though Delaware is one of the smallest states in the USA. ★ Uruguay no personal income tax. ★ United States Virgin Islands offers a 90% exemption from U.S. income taxes and 100% exemption from all other taxes and customs duties to certain qualified taxpayers. ★ Vanuatu

Some tax havens including some of the ones listed above do charge income tax as well as other taxes such as capital gains, inheritance tax, and so forth. Criteria distinguishing a taxpayer from a non-taxpayer can include citizenship and residency and source of income.

Amounts

While incomplete, and with the limitations discussed below, the available statistics nonetheless indicate that offshore banking is a very sizeable activity. IMF calculations based on BIS data suggest that for selected OFCs (Offshore Financial Centres), on balance sheet OFC cross-border assets reached a level of US$4.6 trillion at end-June 1999 (about 50 percent of total cross-border assets), of which US$0.9 trillion in the Caribbean, US$1 trillion in Asia, and most of the remaining US$2.7 trillion accounted for by the IFCs (International Financial Centers), namely London, the U.S. IBFs, and the JOM (Japanese Offshore Market).^[24]
Tax Justice Network, an anti-tax haven pressure group, suggests that global tax revenue lost to tax havens exceeds US$255 billion per annum, although those figures are not widely accepted. Estimates by the OECD suggest that by 2007 capital held offshore amounts to somewhere between US$5 trillion and US$7 trillion, making up approximately 6-8% of total global investments under management. Of this, approximately US$1.4 trillion is estimate to be held in the Cayman Islands alone.^[25]
The Center for Freedom and Prosperity disputes claims about foregone tax revenue. Academic researchers also have found that tax havens actually boost prosperity in neighboring jurisdictions by creating tax-efficient platforms for economic activity - much of which would not occur if subject to onerous taxes if controlled by a domestic entity.

Modern developments

On 25 January 2007 Senator Byron Dorgan (for himself and on behalf of Carl Levin and Russ Feingold) presented a bill to the U.S. Senate to amend the U.S. Internal Revenue Code 1986 to treat controlled foreign corporations which are established in tax havens as domestic corporations, and subject to full taxation as such within the U.S.^[26]
The proposed amendment would define the following countries as tax havens for the purposes of the legislation: Andorra, Anguilla, Antigua and Barbuda, Bahamas, Bahrain, Barbados, Belize, Bermuda, British Virgin Islands, Cayman Islands, Cook Islands, Cyprus, Dominica,^[27] Gibraltar, Grenada, Guernsey, Isle of Man, Jersey, Liberia, Liechtenstein, Maldives, Malta, Marshall Islands, Mauritius, Monaco, Montserrat, Nauru, Netherlands Antilles, Niue, Panama, Samoa, San Marino, St. Kitts and Nevis,^[28] St. Lucia, St. Vincent and the Grenadines, Seychelles, Tongo, Turks and Caicos, and Vanuatu.
That draft legislation was superseded by the unambiguously named Stop Tax Haven Abuse Act which was introduced by Senator Levin together with Presidential candidiate Barack Obama and Senator Norm Coleman.^[29] The Act would introduce a large number of measures designated to attack transactions perceived to facilitate unlawful tax avoidance by the use of offshore tax havens. Broadly same list of countries above was included in the earlier bill as designated tax havens, but with the addition of Aruba, Costa Rica, Sark and Alderney (which are treated, curiously, as sub-sets of Guernsey rather than independent jurisdicions), Hong Kong, Latvia, Luxembourg, Singapore, Switzerland and the removal of Andorra, Bahrain, Liberia, Maldives, Marshall Islands, Monaco, Montserrat, Niue, San Marino, Seychelles and Tongo.
Some of the measures highlighted include:

★ creating a presumption that an offshore company or offshore trust is controlled by the U.S. taxpayer who formed it.

★ empowering the U.S. Treasury to take special measures against foreign jurisdictions which "impede" U.S. tax enforcement.

★ requiring U.S. financial institutions that open accounts for foreign entities controlled by U.S. clients, or open accounts in offshore secrecy jurisdictions for U.S. clients, or establish entities offshore for U.S. clients, to report such actions to the IRS.

★ taxing income originating from offshore trusts used to buy real estate, artwork and jewelry for U.S. persons, and treating as trust beneficiaries those persons who actually receive offshore trust assets.

★ increasing current penalties on promoters of unlawful tax shelter.

★ prohibiting the U.S. Patent and Trademark Office from issuing patents for "inventions designed to minimize, avoid, defer, or otherwise affect liability for Federal, State, local, or foreign tax".

★ requiring hedge funds and company formation agents to establish anti-money laundering programmes equivalent to those which apply to banks and other financial institutions.
Many of the intiatives appear politically populist rather than a serious attempt to curb tax mitigation schemes.^[30] Other aspects of the legislation seem to be predicated on outdated stereotypes of tax havens, and assume that most tax havens continue to operate a culture of secrecy and with complete disregard for modern know-your-client requirements,^[31] and bear little relationship to modern commercial practice.^[32] The fact that the bill is expressed to designate four European Union countries (Cyprus, Latvia, Luxembourg and Malta) and three other leading global economies (Hong Kong, Singapore and Switzerland) automatically as non-cooperative tax havens might indicate the limited prospects of the bill becoming law in its current form.
Led by the Center for Freedom and Prosperity, various free-market groups, think tanks, and taxpayer organizations have encouraged the Bush Administration to reject legislation seeking to penalize low-tax jurisdictions.

See also

★ Anarcho-capitalism

★ Asset protection

★ ATTAC NGO's criticism of tax haven and underground economy

★ Corporate haven

★ Free port

★ Free economic zone

★ International Business Corporation

★ List of offshore financial centres

★ "Margolis Schemes"

★ Offshore bank

★ Offshore company

★ Offshore Financial Centres

★ Offshore trust

★ Tax avoidance and tax evasion

★ Tax resistance

★ Tax exile

★ Tax slavery

Notes

1. Doggart, Caroline. 2002. ''Tax Havens and their uses'' (originally published 1970), Economist Intelligence Unit, ISBN 0862181631
2. "[T]he tax haven is a creature of the twentieth century, and began to be used extensively because of the high levels of tax which prevailed after the First World War" at para 26.1, ''Tolley's International Tax Planning'' (2002), ISBN 0754513394
3. See generally Introduction to ''Tolley's International Initiatives Affecting Financial Havens'' (2001), ISBN 0-406-94264-1
4. The ''Personen-und Gesellschaftsrecht'' of 20 January 1926
5. ''Tolley's Tax Havens'' (2000), ISBN 0754504719
6. A usage which was still being echoed to some degree in the special report of ''The Economist'' in 1990, ''Tax Havens and their uses'', ISBN 0 85058 292 X, Special Report No. 1191. The report helpful includes indications of quality of life in various tax havens which future tax exiles may wish to consider.
7. For example a double taxation treaty still exists between Barbados and Japan, and another between Cyprus and Russia. Mauritius has a double taxation treaty with India that is used for tax mitigation, although India is seeking to renegotiate the treaty, India to push for change in tax treaty with Mauritius
8. The best examples of this were probably Gibraltar and the British Virgin Islands.
9. According to The CIA World factbook tax havens make up 7 of top 12 countries in world (including the top 3) for highest GDP per capita (not counting Ireland as a tax haven for these purposes). In the case of Caribbean and African tax havens, this is all the more stark for the poverty nearby. For example, the two countries closest to Cayman in geographical terms are Jamaica and Cuba.
10. Election Under Fire
11. ''Tolley's Offshore Service'' (2006), ISBN 1-405-71568-5
12. This is a simplistic example; in most sophisticated tax codes there are extensive provisions for catching "gifts" (such as a declaration of trust) made for a specified time preceding death.
13. It has been estimated over 75% of the world's hedge funds (probably the riskiest form of collective investment vehicle) are domiciled in the Cayman Islands, with nearly US.1 Trillion AUM - ''Institutional Investor'', 15 May 2006, although statistics in the Hedge Fund industry are notoriously speculative.
14. Companies incorporated in tax havens are often used as bond issuing vehicles in securitisations for tax reasons.
15. The United Kingdom is one country that has strict forced disclosure rules. - http://www.hmrc.gov.uk/aiu/index.htm
16. Such as ATTAC and the Tax Justice Network. See for example: Offshore watch
17. See for example the views expressed in ''The Guardian'' in 2001.
18. Study shows Barbados is good for Canadian economy, By Randy Howard, ''Mon Mar 05 2007''
19. Barbados and the OECD Press Release, The Development Division, ''January 31 2002''
20. http://ww1.transparency.org/newsletters/99.1/reforms.html#Barbados
21. Barbados fights (Tax Haven) label, Barbados Nation Newspaper, ''April 20''
22. Hong Kong itself has usually rejected the label. The former financial secretary, Nicholas Haddon-Cave has asserted: "In Hong Kong we rely on our low tax structure and free movements across exchanges to encourage investment, and not on the usual gimmicks of tax holidays and quick write-offs found in tax havens."
23. http://www.globalpolicy.org/nations/haven/mauri.htm
24. http://www.imf.org/external/np/mae/oshore/2000/eng/back.htm
25. Places in the sun, The Economist, ''February 22 2007''
26. S. 396, GovTrack, ''January 25 2007''
27. The bill spells the name of Dominica incorrectly.
28. Interestingly, the bill refers to the Territory as St. Christopher and Nevis, a name which the Territory itself has not used generally since the last century.
29. Retrieved from www.senate.gov 31 August 2007
30. In particular the prohibition against granting patents for tax mitigation schemes are wholly implausible in commercial terms; legal schemes of that nature rarely pass the innovation test required for a patent, and even where they might, the schemes are rarely (if ever) patented (which would be more likely to lead to them being both copied and brought vigorously to the attention of the Government).
31. In fact, the U.S. already has unilateral mutual assistance treaties with most major tax havens; see for example in the British Virgin Islands the Mutual Legal Assistance (United States of America) Act, 1990 and the Mutual Legal Assistance (Tax Matters) Act, 2003 (also relating to a bilateral agreement with the U.S.).
32. ''Washington Times'' - Commentary and ''Financial Times'' - Financial standards under fire.

Further reading

★ Baker, Raymond W., "Capitalism's Achilles' Heel: Dirty Money, and How to Renew the Free-Market System.", ''(2005)''

★ Henry, James S., "The Blood Bankers: Tales from the Global Underground Economy.", ''(2003)''

★ Teather, Richard, "The Benefits of Tax Competition.", (2005) http://www.iea.org.uk/files/upld-book303pdf?.pdf

External links

★ Offshore Banking and Financial Centers

★ Offshore Financial Centers -- IMF Background Paper

★ Congressional Research Service (CRS) Reports regarding tax havens

★ Tax Justice Network

★ An OECD Proposal To Eliminate Tax Competition Would Mean Higher Taxes and Less Privacy - Heritage Foundation: Washington D.C.

★ The Moral Case for tax Havens

★ The Economics of Tax Competition: Harmonization vs. Liberalization