Myths about tax havens.
Tax havens remain to be a mysterious concept for many people. Recently there have been a lot of press attacks on offshore jurisdictions that contributed to the rumours and speculation which resulted in myths about tax havens.
The common perception, however, is not accurate and many remain to be misinformed. In this blog we will look at the three biggest myths about tax havens.
1. There is not tax liability in tax havens
Not true. The level of taxation varies from country to country and the same applies to offshore jurisdictions. Various offshore destinations will offer different tax rates a company will have to pay. The choice of location will depend not only on the tax rate but also on other factors such as accounting requirements, infrastructure, legislation etc. Furthermore, the rate will also vary depending on whether you are an individual or an offshore company.
Choosing the right locations is important for your company’s growth and success, and getting a professional help is highly advised.
2. All offshore tax havens are exotic islands
Not true. This is one of the biggest misperceptions of what a tax haven is. Surely, some tax havens are situated in warm locations with beautiful beaches and blue sea, but at the same time many are not. The list of tax havens also include economically developed countries like Lichtenstein, Switzerland, Ireland, Luxembourg etc. Some, that might come as a surprise to many, are also considered to be offshore jurisdictions like the United States or the Isle of Man that have significant tax benefits.
3. Offshore Tax Havens are just for criminals
Not true. This major myth is the result of the work of media that created such stereotype. Even though there is a possibility for that statement to be partially true, still the majority of businesses and individuals use tax havens legitimately. For example, according to Tax Justice Network, 12.1 trillion USD have been managed by the 50 largest world banks offshore.
Those operations are completely legal that have their source from corporate accounts. Such companies are seeking to expand their activities internationally avoiding double taxation as well as to protect their assets.