If there’s one thing the Panama Papers scandal has brought to light, it’s the shady nature of tax havens. As we all know, there are certain places around the world where wealthy individuals and major corporations have the freedom to hide away their assets in offshore accounts and avoid tax contributions.
The countries we call tax havens are essentially playgrounds for the rich and famous, providing international banking services with a promise of financial secrecy. Recently named the “tax haven for the European Union”, Gibraltar has, time and time again, attracted controversy for its tax rates, with economic experts calling for a reform to the British territory.
According to Richard Murphy, Professor of Practice in International Political Economy at City University: “Gibraltar is known to provide offshore services such as the incorporation of offshore companies, offshore banking, insurance and investment fund management among other services. The economy of Gibraltar depends heavily on its offshore financial sector.”
But it’s not like Gibraltar is the first tax haven to be named and shamed. Here are nine of the most prolific on the planet:
A lot might get lost in the Bermuda Triangle, but money isn’t one of those things. Previously named the world’s worst tax haven, Bermuda has a zero per cent corporate tax rate, allowing organisations to rake in millions. In 2012, US multinational companies recorded $80 billion in profits in Bermuda.
As one of three countries which make up the Benelux Union, Luxembourg has a status for being a tax shelter. Business friendly laws enable international companies to funnel billions through the nation and duck huge tax bills. Further relief arrives in the form of large scale profit sharing and zero per cent withholding taxes.
- Cayman Islands
Sources indicate the Cayman Islands boast the biggest tax loophole for individuals and multinational corporations. Similarly to Bermuda, American firms are said to have netted billions in profits from the Caymans, on account of them having the freedom to retain assets, tax-free.
- Channel Islands
Wedged between France and England, the Channel Islands are home to hundreds of international corporate subsidiaries. The archipelago is made up of two British Crown dependencies: The Bailiwick of Jersey and the Bailiwick of Guernsey – both of which are self-governing. With a tax haven status dating back to the mid-twentieth century, Jersey alone boasts $5 billion in assets per square mile.
The paradise island of Mauritius is a popular passage for foreign investments. Mega corporations including Goldman Sachs, JPMorgan Chase and Citigroup all said to have subsidiaries in Mauritius, due in large part to the nation’s low corporate tax rate.
For a city-state with only 30,000 residents, Monaco continues to draw some of the richest people on the planet, with one in three residents reported to be a millionaire. Not only are locals exempt from income tax, but business taxes are low too.
Switzerland owes its reputation as a financial centre to a mixture of low taxes and bank secrecy. Such perks make it an attractive destination for individuals and corporations to leverage funds overseas. Companies with ancillary services in Switzerland include Black & Decker, Merck and Pepsi.
Lack of both withholding tax and corporate income tax has placed the Bahamas high on the list in terms of financial loopholes. U.S corporations such as Viacom and Goldman Sachs are just a few of the Fortune 500 companies to have reaped the benefits of having the Bahamas on their doorstep.
Irish officials have continually denied that the country is a tax haven, but research from Oxfam has shown otherwise. Profit-shifting and aggressive tax planning structures have placed Ireland sixth in a list of 15 countries complicit in large scale corporate tax avoidance.