Critical Analysis of Tax Havens

: A critical analysis of tax havens : Major criticisms and arguments in favour of tax havens

Introduction

Most of developed countries have recently been faced by serious abusive transactions in regard to tax havens . However , it has been reported that Australia faces less of this threat albeit the increase of tax evasion tendencies among small enterprises and at individual level . With regard to Australia , the financial losses are faced by both individuals , who lack are ignorant of financial matters or do not have access to descent financial advice the other casualty are

Australia 's regional and national governments that see a decrease in their tax revenues

In to understand and track tax evasion behaviours that poses threat to Australian economy , local authorities , especially the ATO accesses and analyses different data sets . The major source of this data is AUSTRAC that keeps track of international financial transactions in collaboration with foreign government agencies among other international agencies . The second source of data includes the local financial institutions that are mandated to submit the required data to ATO . Some of the information that local financial institutions submit to ATO includes debit and credit card transactions undertaken by Australians locally and internationally . The third source of ATO data comes from the local , regional and international tax professionals , most of which are provided through treaties . Australian authorities respond to these treaties by providing data needed by foreign countries

The OECD , UN and EU are trying very hard to develop measures to counter the distorting effects of harmful tax competition on investment and financing decisions and the consequences for national tax regimes Globalisation is creating the challenges in the field of tax policy . Tax schemes aimed at attracting financial and other geographically mobile activities can create harmful tax competition between states , carrying risks of distorting trade and investment and could lead to the erosion of national tax bases . Australia has been a member of the OECD since 7th June 1971

Governments and other stakeholders tend to attack and condemn tax havens because of the competition and pressure thy put on national tax receipts . Indeed , tax heavens competition force national governments to review their tax rates , reduce government sizes and improve collection mechanisms , all of which require fiscal discipline that lacks in the responsible agencies . Most of these accusations are , however , baseless considering that economic successes that come with tax revenues

Tax Haven Defined

A Tax haven is often called as the unknown known ' by academics . A tax haven is a country which provides no tax or a low tax environment . In some offshore jurisdictions the reduced tax regime is aimed towards entities organized in the country with all operations occurring outside the country . These countries seek to encourage investment and make up revenue losses by charging a variety of fees for the start up of the entity and on an annual basis . Even the Unites States of America (USA is considered a tax haven by some countries . Definition given by OECD of "Tax Haven...