While there is no universally agreed definition of what a “tax haven” is, a tax haven, generally speaking, is a country or jurisdiction that enables multinational corporations and individuals to escape the rule of law in the countries where they operate and live, and to pay less tax than they should in those countries.
The term tax haven itself is troublesome, because while these places offer enable corporations and individuals to circumvent tax laws, they also allow them circumvent criminal laws, transparency requirements, financial regulation, inheritance rules and more.
The term “secrecy jurisdiction” is used instead of tax haven to refer to jurisdictions that specialise in enabling individuals to hide their wealth and financial affairs from the rule of law, more than in enabling multinational corporations to shift tax out of the countries where they operate in order to pay less tax. Ireland, for example, is a corporate tax haven but not really a secrecy jurisdiction; Switzerland and Luxembourg offer secret banking, corporate tax abuse and a wide range of other offshore services. The United Kingdom does not itself offer secret banking but it sells an even wider range of offshore services, including lax financial regulation.
Several international bodies have their own lists of tax havens, which are frequently skewed by political expediency. In other words they are politicised and not evidence-based lists. These lists tend to exclude or downplay large, powerful nations like the US and highlight small, weaker ones.
We have two indexes which are the product of years of exhaustive research into financial secrecy and corporate tax abuse. Our indexes make no concessions and are based on rigorous assessments by a team of experts every two years:
- The Financial Secrecy Index ranks jurisdictions based on how much global financial secrecy they enable.
- The Corporate Tax Haven Index ranks jurisdictions based on how much global corporate tax abuse they enable.
If your country is at the top of these indexes it means it is one of the world’s worst offenders. But that does not mean that countries lower down the index have clean hands. All jurisdictions have urgent steps they need to take to end their role in global tax.