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The activities associated with tax havens exist in a legal gray area since many of their activities are legal, but others are not. It is legal, for instance, to store money earned overseas in tax havens to avoid paying taxes in one’s country of residence.
It varies from source to source what exactly qualifies as a tax haven, but modern tax havens typically follow guidelines set by regulatory bodies such as the Organisation of Economics.
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World’s Most Renowned Tax Havens
This is one of the world’s leading tax havens and also one of the world’s richest countries. Around 30% of US fortune 500 companies have subsidiaries in Luxembourg, according to the Citizens for Tax Justice and US PIRG Education Fund. A good example is Amazon.com’s European headquarters in Luxembourg, from all sales in Europe, which are funnelled.
British Virgin Island
There are more than 500 times more foreign investments in this British Colony than its economy is worth. In spite of the country's official claim that it's not taxed heaven, the BVI has a mere 36,000 residents but more than 400,000 listed companies and an estimated 1.5 trillion dollars in assets.
Approximately one-fifth of the world's $30 trillion in total banking assets was held by the Cayman Islands. The Cayman does not impose any direct taxes on residents, including property, income or payroll taxes. This is especially popular with huge fund managers because the income tax and corporate rates are 0%. Pepsi, Marriott and Wells Fargo have subsidiaries in Cayman Island.
It is known for its tourist-friendly beaches, but financial professionals may also be familiar with its reputation for being a tax haven. Bermuda's gross domestic product per capita is abnormally high because there are no taxes on corporate income, dividends, interest, and royalties. In order to avoid US taxes, companies such as Google and Nike have parked billions of dollars in Bermuda accounts.
According to the former Dutch finance minister Jan Kees de Jager, the country's financial systems are much less exploitable than those of Switzerland or the Cayman Islands. Many fortune 500 companies that funnel profits through Dutch subsidiaries may feel differently, However, including Google, Fiat Chrysler, IBM, and many others.