Tax Havens Explained

Date: 2015-10-07; view: 445.

Ex. 7. a) Read and discuss the text.

DISCUSSION

b)Sum up the text in5-7 sentences and present your summary in class.

c)Give your opinion on "tax havens".

What do the Bahamas, Bermuda, Hong Kong, Liberia, the Netherlands, the New Hebrides, Panama, and Switzerland have in common? They are all "tax havens".

Essentially, a tax haven is a place where foreigners may receive income or own assets without paying high rates of tax upon them. Although, strictly speaking, not all tax havens are countries, we can refer to them as such here for the sake of convenience. In some havens the tax relief that foreigners enjoy stems from the absence of the chief
forms of direct taxation - income, estate, and gift taxes; but in most countries the relief stems from special features of the tax system that result in a very low effective tax rate on certain forms of foreign investment.

Even though the list of tax havens includes several developed countries, most are developing countries. It is precisely their example that other developing countries are tempted to follow, in the hope that becoming a tax haven will help them solve some of their economic problems.

Tax haven operations consist fundamentally in establishing within a tax haven country one or more legal entities, such as trusts, personal holding companies, or corporate subsidiaries, and attributing to them income earned elsewhere in order that it should be taxed at the country's low rates - or perhaps not taxed at all. This objective is usually accomplished by either (1) accumulating income in the tax haven country at low rates of tax to be withdrawn later and invested
elsewhere according to the investor's wishes; or (2) artificially shifting business profits from high-tax countries to a tax haven country.

Low tax rates are perhaps the principal attraction offered by tax havens. Usually these low rates are associated with income taxation; in fact, what springs to mind immediately upon hearing the words "tax haven" is the absence of income taxation that exempts foreign investors. Though it is true that many of the advantages offered by tax haven countries are income tax advantages, these are by no means the only benefit that these countries offer to foreign investors.

Within the tax field, the absence of other taxes such as estate, inheritance, and gift taxes may be as important to certain investors as the absence of an income tax. Bilateral tax treaties between a tax haven country and some of the major developed countries are another feature that may attract investors. The existence of a tax treaty allows third-country investors to base their holding companies in tax havens and obtain a reduction in withholding taxes applied to the dividends and interest they receive from developed countries with which the tax haven country has the tax treaty.

Strict and well-enforced rules of banking secrecy and, in general, the possibility of doing business without close supervision by government agencies are additional attractions usually offered by tax haven countries. Other factors, such as the low cost of doing business, the existence of liberal banking regulations, and the absence of exchange controls are also important. Finally, a good communications service, a well-developed legal system with an abundance of legal and accounting expertise, and, above all, a high degree of political and financial stability also help to make a country successful as a tax haven.

Words you may need:

Англійський Російський Український

варіант варіант варіант

tax haven налоговое убежище податкове сховище
strictly speaking строго говоря строго кажучи

for the sake of из соображений удобства з міркувань зручності

convenience

tax relief налоговая льгота податкова пільга

enjoy (зд.) пользоваться (тут) користуватися

to stem from происходить, проистекать траплятись, проістікати

из із

estate tax налог на недвижимость податок на нерухомість

gift tax налог на дарение податок на дарування

trust траст траст

holding company холдинговая компания холдингова компанія

subsidiary дочерняя компания дочірня компанія

attribute приписывать (кому-л.), приписувати (комусь),

относить (за счет/на счет відносити (за рахунок/на

чего-л.) рахунок чогось)

accomplish осуществлять здійснювати

accumulate аккумулировать, аккумулювати,

накапливать накопичувати

withdraw (зд.) забирать, отбирать (тут) забирати, відбирати

artificially искусственно штучний

shift перемешать переміщувати

to be associated (with) быть связанным (с) бути пов'язаним (з)

what springs to mind первое, что приходит в перше, що приходить у

голову голову

inheritance tax налог на наследство податок на спадок

exempt освобождать от уплаты звільнення від сплати

налогов податків

bilateral двусторонний двусторонній

well-enforced (зд) действенный (тут) діючий

abundance изобилие, избыток достаток, надлишок