Locations of offshore tax jurisdictions (infographic)
Thursday, January 21, 2010 | Posted by: Fiona Cullinan
Categories:
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Infographic,
Protecting your wealth
| Tags: tax,
finance,
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banking,
tax haven,
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While most people think of the traditional tax haven as being somewhere like Switzerland or Bermuda, there are in fact more than 60 offshore financial centres around the world, according to the IMF.
Grant Thornton’s latest infographic shows the scale and global spread of such offshore tax jurisdictions, locating them by country, city and island/political region…
Click here to see the graphic at a larger size.
What is a tax haven?
Tax havens can be hard to define and locate. However, the main feature of a tax haven is that its legal and financial set-up can be used for minimising tax (through avoidance or evasion) by other jurisdictions.
Until recently, secrecy was a major factor in that banks would not easily give up information on their holdings and legal entities to tax collectors. But now the G20 is putting pressure on offshore tax havens to open up their doors and become more transparent in their dealings (or face sanctions), while at the same time granting tax ‘amnesties’ to encourage those with undeclared funds to come forward.
Offshore banking under threat
The G20 attacks mean that tax havens face losing their status as attractive places to invest. “This has been a global change brought about by the increasing realisation by the G7/8 nations that they are losing desperately needed revenue post credit-crunch to some of these havens,” says Dave Jennings from Grant Thornton’s Tax Investigations Team.
“Most treasuries knew there was untaxed income in havens but had very little power to get to it in the past. There were few double tax treaties, no tax information exchange laws and it was only through the Liechtenstein whistleblower and the US:UBS case that they got a lot of information.”
Tax havens must now comply with the OECD’s internationally agreed tax standard on exchange of information – those that cooperate will move up a tiered list (and away from “tax haven” status) while failing to cooperate results in being blacklisted. The number of tax exchange agreements issued since 2008 has been astonishing compared to previous years.
Opportunities for disclosure of “secret” funds
The international crackdown on tax havens has been accompanied by a series of tax ‘amnesties’ – including the New Disclosure Opportunity, the Liechtenstein Disclosure Facility and the latest amnesty aimed at those in the medical profession. Together with the growing transparency being forced on offshore jurisdictions, it seems that this infographic may look very different in a year’s time.
View more Grant Thornton infographics:
* Reasons for divorce vs state of the economy
Reader Comments (2)
Thank you Michael for your comment.
It is interesting to consider how the definition of “tax haven” has changed. TheOECD used to include, within their definitions, a state that had low or no local taxes and attracted non-residents to invest with the probable intention of avoiding taxes in their own country of residence. The problem with that definition is that it brought into play countries such as the UK and USA who may also have attractive rates in certain circumstances for some taxpayers, such as the non-domiciled tax rules.
The OECD has gradually moved away from that definition and with the black and white listings now emphasising co-operation and transparency. The intention being that if a country has less secrecy about their investors and will supply information to another country by way of a tax treaty then they would be less of a threat to worldwide taxation.
Therefore, if a “tax haven” moves up to the white list, it is leaving the current definition of “tax haven” status but retains the right to determine their own tax rates.
Added Fri Feb 2010 at 05:02:06
I believe the white list shows the tax havens that are cooperative. I do not think that they lose their tax haven staus!
Added Thu Feb 2010 at 09:02:36