Why cayman islands tax haven

UK told to 'hold fire' on April tech tax. Tech giants face higher tax bills under shake-up. Image source, Getty Images. The BBC is not responsible for the content of external sites. View original tweet on Twitter. Related Topics. Cayman Islands Tax haven European Union. Likewise, China is looking to defend its low-levy zones. The Caymans have a lot to lose.

The lack of a corporate tax has enticed companies like Facebook FB. O to use shell structures to reduce their levies. Still, if a multinational pact falls short of its goals, and it likely will, tax havens like the Caymans will stay intact. That means a race to the bottom on global levies will keep running. Follow GinaChon on Twitter. Breakingviews Reuters Breakingviews is the world's leading source of agenda-setting financial insight. However, as a tax expert , I find the effort hard to take seriously.

Put simply, tax havens are jurisdictions that offer low or even no taxes in a bid to attract foreign investment. A taxpayer who is comfortable doing that does not need a tax haven. The second sign of a good tax haven is transparency, political stability and rule of law.

If it costs more in lawyers, accountants and bribes to avoid taxes overseas than it costs to pay the tax at home, there is no point to a tax haven. The third sign is privacy. For many years, Swiss banks provided the gold standard in that regard by refusing to reveal anything about their depositors to anyone.

That changed in , when Swiss banks agreed to report on their depositors to 43 European countries. The loss of the complete secrecy that Switzerland once provided has made shell companies — and the countries that make them easy to set up — much more attractive.

Shell companies are basically companies without active business operations or significant assets that are stacked one on top of the other to make it harder to trace ownership.