Are you extensively looking for legal ways to save on taxes? If so, you might have been aware of the typical advice you might have found: Find a jurisdiction in the Carribean like Belize or Cayman Islands, and store your hard-earned money there, tax-free.
Indeed, the Carribean is a popular hotspot for offshore banking and company formation. Setting up a company in, say, Belize, will grant you many perks, such as local tax exemption, fast incorporation and no annual reporting required.
But have you ever think that the best tax havens might not be located in the Carribean or any other 'obscure' locations, but in developed countries?
In fact, did you know that you might actually need more than one offshore jurisdictions for asset protection? Indeed, the best practice for creating an offshore presence for your assets with minimal taxation is by creating a complex structure that involves multiple offshore jurisdictions – small jurisdictions and their larger counterparts.
Read on to discover the best tax havens in the world.
Finding the best OFCs – using data-driven approach
Asking around – even your trusted lawyers - for the best tax havens – or Offshore Financial Centers (OFCs) if you will – may work, but the answer could be subjective. There will be names mentioned over and over again, but still, you don't really know which one is the most 'popular' ones.
However, things are changed; a group of computer scientists introduces data-driven approach fo identifying top tax havens based on the global corporate ownership network.
The data size is enormous: More than 98 million firms are inter-connected through 71 million relations between firms – analyzed to identify popular sink and conduit OFCs.
Sinks are offshore jurisdictions that attract and retain assets. Conduits are offshore jurisdicitions that act as intermediate destinations, routing clients' assets to sinks without/with minimal taxation.
To avoid getting into the technical nature of the report, let's cut the chase to some of the (surprising) findings.
The best tax havens in the world are...
Please note that 'the best' here means that the popular jurisdictions below functioned as:
- 'Busiest' offshore financial hubs – conduits – that reroute clients assets to sink OFCs.
- Sink OFCs that are popular destinations of assets flowing from conduit OFCs.
There are 5 conduits and 24 sinks standing out in the analysis results. We can safely consider those 29 offshore jurisdictions as top tax havens in the world.
Conduits OFCs (in particular order):
- The Netherlands
- United Kingdom
- Switzerland
- Singapore
- Ireland
Sink OFCs (in particular order):
- British Virgin Islands
- Taiwan
- Jersey
- Bermuda
- Cayman Islands
- Samoa
- Lichtenstein
- Curacao
- Marshall Islands
- Malta
- Mauritius
- Luxembourg
- Nauru
- Cyprus
- Seychelles
- Bahamas
- Belize
- Gibraltar
- Anguilla
- Liberia
- Puerto Rico
- Guyana
- Hong Kong
- Monaco
Some surprising jurisdictions in the list
There are offshore jurisdictions that you may be unfamiliar with, that stand out in the list.
Taiwan
Taiwan, for example, surprisingly ranks #2 in the list – a very prominent sink, in other words. Studies reveal that Taiwan is categorized as an 'unnoticed tax haven' for a couple of reasons:
- - It hasn't signed any OECD's AEoI/CRS agreements
- - A strong jurisdiction that's driven by the tech sector, which happens to be a sound offshore jurisdiction “thanks” to China's pressure for Taiwan not to participate in the IMF's FDI statistics collection.
The Netherlands and the United Kingdom
The Netherlands are seldom mentioned as the “go to” tax havens due to the image of the country being fully regulated and considered as a developed country. The same thing goes to the United Kingdom.
What makes both jurisdictions the largest may be their reputation, stability, and strong tax treaties with many other jurisdictions, particularly in the EU region.
Takeaway
More than identifying the top offshore jurisdictions, the research report offers a fresh look at the global corporate ownership network, which enables us to do any of the following:
- - As an asset owner: Discover the best network for our assets, depending on our preference on jurisdictions. For example, if we want to do business in the European region, we may want to choose The Netherlands or United Kingdom as the conduit between your company to Luxembourg and some other European sink jurisdictions.
- - As a legislator: You can identify and trace the asset movement of a particular entity. On a larger scale, you can analyze the structure to impose legislation that limits the movement of assets to tax havens.
Consult with us to learn more about creating an interlinking offshore structure for your company, as well as choosing the best strategies and tactics for avoiding taxes, as well as protecting assets.
AUG
2017
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