A tax haven also known as offshore jurisdiction is a nation that gives foreign individuals and investors who have bank accounts or investments in its territory the benefit of paying little or no tax in an economically and politically stable environment for their investment…
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Countries with this kind of policies do so aiming to attract more foreign investors so as to boost their economy. Such nations are usually small nations with limited natural and industrial resources (Anderson, 2014).
Without this regime that attracts foreign investors who come to boost their economy, the existence of such nations would be threatened. These offshore jurisdictions have attracted many foreign investors in recent years who most of them are usually persons fleeing their country’s taxation systems so as to establish their investments in more favorable environments. Most countries do allow their citizens to invest in tax havens. In Canada, depositing funds in a foreign tax haven is allowed by the law. A Report on any income related to such accounts is the only requirement the government asks from these investors (Hale, 2012).
Tax havens are mainly found in small countries and especially islands. As stated earlier the main feature of tax havens is a favorable tax policy and investment environment for foreign investors operations. However, there are other features that could help one identify tax havens.
Bank secrecy is a serious and strict rule. Data and Information about account holders is only given to respective authorities only in cases of available evidence of major crimes like drug trafficking or terrorism
Andorra, Bahamas, Bermuda, Hong Kong, the British Virgin Islands, Monaco, the Channel Islands, Belize, the Isle of Man, Lichtenstein, the Cayman Islands Panama, the Cook Islands, Switzerland, Mauritius, and St. Kitts and Nevis (Anderson, 2014). Pressure from foreign nations that feel the need and demand to collect all tax revenue they believe is entitled to them has forced tax havens to sign treaties that allow tax data exchange. They have also had to sign agreements that allow for the providence of investors
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