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Tax Haven

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A tax haven is a territory where a person or corporation can pay no or a nominal amount of tax by simply being legally based in the tax haven, or having a subsidiary based in the tax haven.

The Organisation for Economic Co-operation and Development (i.e. OECD) lists four criteria to decide whether a jurisdiction is a tax haven:
- Nominal taxes charged, or no taxes at all, on entities based in the tax haven.
- Lack of transparency within the tax haven preventing consistent application of tax laws (e.g. non-disclosure of documentation and accounting records).
- Difficulty in exchanging information with tax authorities outside the tax haven due to laws or administrative practices.
- No requirements for substantial activity by a person, corporation or subsidiary to be based in the tax haven.

A tax haven is often portrayed as a tropical island, but some critics even consider places such as the state of Delaware to be a tax haven.



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