INVESTING IN TAX HAVEN COUNTRIES
What is Tax Haven?
Tax Haven is any offshore country where taxes levied are normally low or sometimes even no taxes are levied for foreign investors as compared to any other country. The main advantage of Tax Haven is that it helps save tax for the company which is investing in a Tax Haven country and ultimately saves the money of the investing Foreign Company. It will positively affect the growth of the company as well as the nation as a whole.
The countries, which are Tax Havens, are Luxembourg, Isle of Man, Mauritius, Ireland, Monaco, Bermuda, Bahamas, Cayman Islands, Jersey, Switzerland, Panama etc.
Who can Use Tax Havens?
Any individual who wants to protect his/her assets, businessperson who is interested in setting up business in a market for trading and investment, company which is looking towards maximizing profit, investor who wants to invest in international companies and are looking forward to remove tax burden can opt the same with low or nil taxation and can obtain the benefit by investing in offshore tax havens.
How to obtain benefit from a Tax Haven country?
Tax Haven Countries provide Tax benefits and to obtain such benefit the foreign investor has to get the company/corporate entity registered within the jurisdiction of a Tax Haven Country. The process is not difficult and is comparatively easy as the main aim of a Tax Haven country is to provide Tax benefit to the Foreign investing Company.
There are two options of obtaining the benefit of Tax Haven Country that is either an offshore company or Offshore Trust.
The offshore company is more suitable for those who are to take benefit of the Tax Haven country in respect of the business with an aim of imposition of minimum taxation on the company and such benefits are available on Offshore Company.
In case of Offshore Trust it is opted by individuals who wants to use the jurisdiction of a Tax Haven country to obtain safeguard in entrusting their assets in a Tax Haven country from excessive taxes and/or any other danger.
What are the Merits and Demerits of Tax Haven?
- Benefit for the Company as the investment made to the Tax Haven Countries are either low tax or free from tax in respect of the investment.
- It provides greater level of privacy and non-disclosure.
- Another benefit is that the saving of Tax is completely legal.
- It helps in growth of the investing individual/Company and benefits the nation.
- Tax havens benefits the economy and encourages companies and businesspersons to invest on Tax Haven Countries.
- No strict rules and regulations in respect of Tax implementation in Tax Haven Countries.
- There is lack of transparency in respect of the transactions taking place with Tax haven Countries.
- As there is lack of transparency, there is chances for occurrence of illegal activities.
- Another aspect in respect of the chances of illegal activities there has been strict scrutiny on the investors on Tax Haven by the local Authorities by the local regulatory authorities by taking place investigative measures.
- As there are chances of illegal activities, reputable banks consider tax haven companies as high-risk clients.