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Tax Havens, Offshore Financial Centres and Preferential Regimes |
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Tax Havens
According to the OECD tax havens are jurisdictions that impose no or low taxes and offer themselves, or are perceived to offer themselves, as locations to be used by non-residents to avoid taxes in their home countries. Example: Many of the Carribean locations. Offshore Financial Centres (OFCs)
OFCs are countries that either no taxes or low taxes with extensive exemptions for foreign income. They may have tax on locally arising income, perhaps a limited tax treaty network and may offer special incentives for holding companies. Example: Mauritius. Preferential Tax Regimes
These are normally high tax jurisdictions with special areas which receive preferential tax treatment. Example: Portugal with its Madeira International Business Centre. Uses of Tax Havens, OFCs and Preferential Regimes These jurisdictions are typically used for the following commercial purposes: Formation and administration of offshore companies, trusts, foundations etc. Conducting financial services operations such as banking, insurance, re-insurance, broking, etc. Managing offshore funds. Managing shipping operations and registrations. Administration of headquarters companies, co-ordination centres and outsourcing of non-core operations of large companies (e.g re-invoicing, payroll, etc). Management of e-commerce business or information technology activities. Administration of tax-leveraged products and investments. Launching IPOs or share listings.
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