How does a tax haven work?

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In every state or city in America, government officials often designate a locality or an area as an economic zone in hopes to develop the location. Economic zones also often have smaller property taxes in order to entice large businesses to bring their business to a city and generate jobs. However, in the interest of saving money, a lot of companies choose to bring a bulk of their business to other countries which are considered tax havens. Steve Sorensen Networth


A tax haven is an offshore financial center that can either be an entire country or a jurisdiction in a country which offers little to no tax liability for foreign businessmen. They also do not require a business to operate within the country for it to receive the designated tax benefit the location offers. The Organization of Economic Cooperation and Development also helped define tax havens in 1998. According to the OECD, a tax haven should have no or nominal tax on relevant income, has lack of transparency, lack of effective exchange of information, and no substantial activities. Steve Sorensen Networth.

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Of course, countries like the Cayman Islands, the Netherlands, Belize, and the Bahamas also get their fair share from companies who choose to operate under their tax laws. The low taxes are often offset by high customs charges, registration fees, and renewal fees. However, this does allow companies like the Goldman Sachs Group to avoid hefty taxes in the US, even if they are primarily operating in that country. Goldman Sachs Group had reportedly set up 905 tax havens for its subsidiaries, the most coming from the Fortune 500 companies. In terms of how much they are able to avoid paying, Apple with three subsidiaries in Ireland, was able to avoid paying $76.7 billion. Steve Sorensen Networth

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