What is tax haven?

What is the difference between a tax haven and an offshore financial center?

  • The London G20 summit on 2 April 2009 made a distinction between the two in the resulting black list for tax havens. How do these two actually differ?

  • Answer:

    A tax haven offers substantially lower taxes than its neighbors. Examples are Gibraltar, the Cayman Islands and Panama.   An offshore financial center is a country with a well developed financial infrastructure.  Examples are Hong Kong, Singapore, London.

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Taxhaven is usually a country with secretive banking laws, super low to zero taxes on income, capital gain, interest, and minimum or no restriction on capital movement. A financial centre is a city with a well developed banking and finance industry, giving a cluster of bulge bracket investment banks, hedge funds, prop trading funds, securities exchanges, a concentration of people rich enough with money to invest etc. Read up the http://www.tfsa.ca/storage/reports/GFCI16_22September2014.pdfand you will know what it entails. Whether it is off-shore or not obviously depends on where your shore is. If you are in China, then Hong Kong is not an off-shore financial centre, but New York is.

Swagato Barman Roy

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