Tax Haven
A country or jurisdiction offering very low taxes and financial secrecy to attract foreign businesses and wealthy individuals.
What is Tax Haven?
A tax haven is a country or jurisdiction that imposes little or no income tax and often provides high levels of financial secrecy, attracting foreign corporations and wealthy individuals seeking to minimize tax burdens. Common features include low or zero corporate and individual tax rates, strict bank secrecy laws, and minimal financial regulation. Well-known tax havens include the Cayman Islands, British Virgin Islands, Luxembourg, Ireland, and Switzerland. Multinational corporations use structures such as transfer pricing, holding companies, and intellectual property licensing to shift profits to low-tax jurisdictions. Governments worldwide have pushed back through treaties, FATCA, and OECD initiatives including a global minimum corporate tax of 15%.
Example
The OECD estimated that corporate tax avoidance through profit shifting to tax havens costs governments worldwide between $100 billion and $240 billion in lost tax revenue annually. Major tech companies like Apple, Google, and Meta have historically used structures routing intellectual property royalties through Irish or Dutch entities to reduce global effective tax rates significantly below statutory rates in their home markets.