15 biggest tax havens in the world

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15 biggest tax havens in the world

 

What are tax havens?

Tax haven is a place where no taxes are levied or levied at a low rate in any form or by whatever name. Tax havens hide the financial information of their clients from the foreign tax authorities. Tax havens are also known by other popular names such as tax shelters, secrecy jurisdictions, offshore, etc.

Some of the biggest tax havens in the world are as follows:

 

#1. Luxembourg

Location: Europe

Features:

  • The foreign companies are made to pay tax only on income generated in Luxembourg.
  • It allows foreign companies to park their funds; so that lesser funds come under the purview of taxation.
  • Giant companies of the world have their subsidiaries in the country Luxembourg.
  • Business friendly laws.

 

#2. Cayman Islands

Location: British Overseas Territory

Features:

  • There can be retention of assets without paying tax.
  • The tax can be saved within the cover of legal ambit.
  • There is no tax on income earned out of its territory; including the interest and dividends earned on investments.
  • However, the tax laws are a bit complicated.

 

#3. Isle of Man

Location: In the Irish sea between England and Ireland

Features:

  • The taxation rates are very low.
  • There is no capital gains tax, inheritance tax, corporation tax or stamp duty.
  • The territory has the best employee benefit plans including retirement benefit plans such as pensions, etc.
  • there is a tax cap on total income payable of £125,000 per person; which makes the wealthy individuals convenient to settle over here.

 

#4. Jersey

Location: Between England and France.

Features:

  • There is no inheritance tax or capital gains tax in Jersey.
  • There are no corporate taxes.
  • The taxes are levied only on financial service, utility and property companies.
  • The maximum rate of income tax on personal income is fixed @ 20%.

 

#5. Ireland

Location: North Atlantic

Features:

  • The country does not consider itself as a tax heaven.
  • However, the fortune companies like Google, Apple, etc. have parked their funds in Ireland for managing their tax liabilities.
  • The country follows ‘Pay as you earn’ concept.
  • Other kind of applicable taxes are Corporation Tax, Value Added Tax, Relevant Contract Tax, etc.

 

#6. Mauritius

Location: Nation in the Indian Ocean

Features:

  • There is no tax on capital gains and interest.
  • The Corporate taxation rate is 15%.
  • The benefits of Double Taxation Avoidance treaties with different countries can be availed.
  • Tax is payable only on the income generated in their territory.
  • VAT is fixed at a rate of 15%.
  • The alternative minimum tax is payable @7.5% of book profit or 10% of dividends declared if tax payable is less than 7.5% of book profit.

 

#7. Bermuda

Location: North Atlantic

Features:

  • There is no corporate tax, income tax or capital gains tax at all.
  • Also the other taxes are levied at a lower rate.
  • Various giant companies had their subsidiaries in Bermuda.
  • The employees have to pay payroll tax @4.75% of their salary.

 

#8. Monaco

Location: France Mediterranean coastline

Features:

  • Till date, no income tax has been charged to any of the residents.
  • This country has most expensive real estate market in the world.
  • The taxes for the corporations are very low.
  • This is a super rich country with the maximum millionaires.

 

#9. Switzerland

Location: Central Europe.

Features:

  1. There are relatively low taxes.
  2. The capital gains of the residents of the country is tax exempt.
  3. The banking institutions maintain secrecy of their client’s information.
  4. It is termed as one of the largest financial centre in the world.
  5. There is no inheritance tax or gift tax in the lumpsum taxation system; but different cantons may levy it.

 

#10. Bahamas

Location: Atlantic Ocean

Features:

  • There is lack of Capital Gains Tax, Inheritance Tax, Income Tax, Gift Tax, etc.
  • It is helpful for people who want to gift their money or any property, etc.
  • Employees have to pay national insurance from their salaries.
  • Stamp duty is levied at varying rates ranging from 2% to 8%.

 

#11. Guernsey

Location: Island between France and England.

Features:

  • This place makes its own taxation laws.
  • Mainly helpful for private banks, legal and accounting bodies, etc.
  • There is no corporation tax and capital gains tax.
  • The dividend income from foreign investments is not subject to tax.

 

#12. Bahrain

Location: Persian Gulf

Features:

  • It does not charge income tax or corporate tax.
  • It has a concept of ‘Social Security Tax’.
  • Municipal taxes on the property are levied @ 10%.
  • The economy is based on oils; though Islamic Finance is an emerging area of finance over here.

 

#13. Labuan

Location: Malaysia

Features:

  • Tax is levied at the rate of 3% on income arising in Labuan.
  • The assessees are not subjected to any kind of audit.
  • No tax on international income of companies registered in Labuan.
  • There is double taxation on the similar income- once paid by the company and other time paid by the employee.

 

#14. Panama

Location: North America

Features:

  • The companies registered in Panama don’t have to pay any local taxes on income received outside Panama.
  • There are no taxes on inheritances, gift, legacies, etc.
  • There are no taxes on gains from bets, public lotteries or any sort of games.
  • The client’s records are kept confidential; foreign authorities can gain access to the same only on order of the court.

 

#15. Hongkong

Location: China

Features:

  • This country has their own taxation system.
  • There’s no capital gains tax, dividend tax, tax on interest.
  • There’s only income tax, that too fixed at a relatively low rate of 15%.
  • The taxation is low and there are secrecy laws which prevent the client’s information getting leaked.

 

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