Havens for evaders and those looking to protect secrets from the wealthy .. When is a country considered a tax haven?

Havens for evaders and those looking to protect secrets from the wealthy .. When is a country considered a tax haven?
In recent years, provinces and states that impose little or no tax have become tax havens, but there are no specific and official criteria for classifying countries as such.
In a report, the Spanish magazine Muy Negocios & Economía says that many countries are haunted by doubts and questions about whether they can be accused of being a tax haven. Among these countries are: Switzerland, Panama, Ireland, Andorra and Malta.
The magazine clarifies that the answer differs from one person to another, because there is no official regulation or document containing the criteria adopted in this classification.
It is up to each country, entity or organization - such as the European Union, for example - to decide whether that country has crossed the red lines in laws and tax procedures and has become a haven for smugglers.
Today, the European Union is updating its laws and the list of classified countries, as there are 12 countries or provinces that are considered tax havens - there is not one of them in the old continent - including the United Arab Emirates.
In Spain, for example, a royal decree was issued in 1991 that includes 48 countries and provinces that are classified as a tax haven, but this list is constantly updated, and the number in it has decreased to 33.

What is a tax haven?

The magazine explains that it is the country or province in which taxes are very low or completely abolished.
In addition, it is common for businessmen and wealthy people who operate in these countries to obtain guarantees that their identities and activities will be concealed in the context of maintaining their banking, commercial and professional dealings.
In these areas of the world there are overseas companies spread, which are those that have been established in specific areas, and are owned by foreigners who use them to circumvent and evade taxes imposed on them by the ministries of finance in their countries of origin.
The magazine adds that the haven - or tax paradise - may be a state, province or region, characterized by a small area and limited natural resources, but characterized by the strength of the banking sector.

Protect secrets

According to a report recently published by the European Chamber of Commerce, the European Union countries are denied entry to 800,000 million euros annually, due to these tax havens.
Of course, the governments of these havens are trying to evade signing any official agreements or treaties to exchange information, especially the data of companies and individuals who live on their land, and they are keen to preserve the blurring of these secrets, and to preserve secrecy and keep them anonymous to encourage them to bring their money to it.
The magazine stresses that these tax havens ask few questions, not answers. Indeed, one of the conditions imposed for these countries and provinces to leave the blacklist for tax evasion is the signing of an information exchange agreement, which allows for the knowledge of those who are hiding their money in their banks.

Why are these havens a problem?

Officials in these havens confirm that what they do is legal and does not constitute any violation, as they are content to allow investors to store their money without paying significant taxes. But the main problem with this practice is that, unlike what happens in the rest of the world, these havens do not ask about the legitimacy of the source of funds, the duration of their deposits in banks and the activities that are used in them.
To clarify this problem, the magazine points out that in Spain, for example, when entering a bank branch carrying a bag containing 6 thousand euros, the service employee will ask you about its source. Likewise, the regulatory and judicial bodies in Europe, for example, if they ask this bank to provide them with a customer's data and their financial situation, they will immediately disclose these data and cooperate with the authorities, something that does not happen in tax havens.
Thus, these practices that occur in small and distant countries and provinces, although they are legal in theory, allow to obtain money illegally and deposit it there without any problems, and these funds deposited in havens enable their owners to avoid paying taxes in their countries. They live.
In addition, these havens are lax and few tax laws. The great benefit that their governments achieve from this fiscal policy is that they take a huge commission in exchange for helping these rich people move their money.

Transfer of funds in Latin America

The magazine says that in the entire American continent, the country of Puerto Rico is the largest beneficiary of this unnatural transfer of funds abroad.
According to data from "MissingProfits.world" ( missingprofits.world ), a joint project of the universities of California, Berkeley and Copenhagen to analyze the fiscal conditions in 21 American countries; This Caribbean island is attracting the most smuggled profits from other countries, and its value in 2017 was more than $ 38 billion.
As for the Cayman Islands, it ranked second, as it succeeded in attracting more than $ 32 billion in funds smuggled abroad, while Panama got $ 18.1 billion.
The magazine notes that the exact definition of the term tax haven is still the subject of controversy and disagreement between governmental organizations and institutions, but these countries and provinces covered by this classification are those that impose low or no taxes altogether, and as such, they attract the wealthy in a non-spontaneous manner.
This feature hurts the economies of the most productive countries, because the companies active in them divert their income to these havens in order to avoid paying due taxes on them.

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