Features and Advantages of Using Tax Havens

• Author: Botis, S.
• Position: Dept. of Finance, Accounting and Economic Theory, Transilvania University of Brasov
• Pages: 181-188

Bulletin of the Transilvania University of Braşov

Series V: Economic Sciences • Vol. 7 (56) No. 2 - 2014

FEATURES AND ADVANTAGES OF

USING TAX HAVENS

Sorina BOTIŞ1

Abstract: The appearance of tax havens is tied to illicit money laundering

process, evolving later under various illegal forms and currently they operate

under the protective umbrella of beneficial jurisdictions belonging to some

political protected States worldwide. For them to be capable of functioning,

special conditions to attract investors have been created. The purpose of this

study is to highlight the main features of the tax havens, their operating

mechanism and peculiarities of their tax laws, offshore entities regime. The

article concludes on the reason of the occurrence, the existence and

proliferation of tax havens, as well as legislative efforts that are submitted

worldwide to eradicate them in the perspective of future global economic and

financial developments.

Key words: tax haven, tax system, taxation, offshore companies.

1 Dept. of Finance, Accounting and Economic Theory, Transilvania University of Braşov.

1. Introduction

In the general context of globalization of

the economy, a significant obstacle to

Governments concerned with the increase

in tax revenues, is the tendency of the

transferability of the results arising from

the productive activity by the contributors,

in areas with low taxation, known as tax

havens, the phrase that tends to be replaced

by the name of international financial

center or a financial haven.

Although associated with terms such as

“immoral”and “ïllegal”, the existence of

international tax havens, had in recent

decades, the effect of a progressive growth

of the economic activity, more than two-

thirds of the international broad money

being performed in their shadow.

There are many definitions for the tax

haven term: according to the report to the

International Service for Gordon Revenue

of the United States of America(IRSI in

the 1981, by the Gordon Committee which

investigated the use of tax havens by the

U.S. taxpayers, a tax haven is any country

which is regarded as such and which wants

this”.[5]

Roger Brunet defines tax havens as

follows: ”It is called tax haven a territory

where individuals and companies have the

sensation that are less taxed than

somewhere else”.[2]

Tax havens are those States that offer a

variety of tax privileges to offshore

companies registered in their territory. Any

offshore company can operate in favourable

tax conditions, provided registration in a tax

haven, the company must conduct business

outside of the record.

Tax havens are those Sates that offer a

variety of tax privileges offshore

companies registered in their territory. Any

offshore company can work in favo urable