What is a tax haven?

There is no generally agreed definition of a tax haven, and the term is extremely hard to pin down with any precision. Depending on which aspect we emphasize, we prefer to either speak of a corporate tax haven or a secrecy jurisdiction.

The CTHI focuses on corporate tax havens. While the main CTHI is created by mathematically combining a haven score with a weighting, the ranking to the right strips out the scale weight and gives a different measure of "haven-ness" -- that is, how aggressive each jurisdiction is in trying to attract multinationals’ profit-shifting.

Every country in the world has some elements that facilitate tax avoidance by multinationals. This may be part of a deliberate strategy to try to attract footloose capital and profit-shifting by multinationals. This may simply be because of omission: for example, the country has not set up the anti-avoidance rules, or the information-sharing and other mechanisms that would reduce its haven score to zero.  

Loosely speaking, a secrecy jurisdiction provides facilities that enable people or entities escape (and thus undermine) the laws, rules and regulations of other jurisdictions elsewhere, often using secrecy as a prime tool. We think that those two words in bold text are key to understanding the phenomenon. You take your money elsewhere to escape the rules you don't like.

Our Financial Secrecy Index (FSI) which complements the CTHI, focuses on what we call ‘secrecy jurisdictions’.

Different jurisdictions have different offshore offerings. The British Virgin Islands, for example, specialises in incorporating offshore companies. Ireland is a corporate tax haven and a haven for laxity in financial regulation but not really a secrecy jurisdiction; Switzerland and Luxembourg offer secret banking, corporate tax avoidance and a wide range of other offshore services. The United Kingdom does not itself offer especially secret banking but it sells an even wider range of offshore services, including lax financial regulation, and it runs a network of secrecy jurisdictions and corporate tax havens like the Cayman Islands. And so on.

Several international bodies have their own lists of tax havens, which are frequently skewed by political expediency. These lists tend to exclude or downplay large, powerful nations and highlight small, weaker ones. Our own lists, the FSI and the CTHI, are the product of years of exhaustive research into financial secrecy and corporate tax games, and make no concessions to power or influence. It is thus a far more objective list.

 

Jurisdiction Haven Score
Cat 1-5
Cat 1
LACIT
[HI 1]
Cat 2
Loopholes & Gaps
[HIs 2-8]
Cat 3
Transparency
[His 9-14]
Cat 4
Anti-avoidance
[His 15-19]
Cat 5
Double Tax Treaties
[HI 20]
Andorra 69.04 94.28 50.00 95.83 100.00 5.12
Anguilla 100.00 100.00 100.00 100.00 100.00 100.00
Aruba 64.38 71.42 62.50 100.00 87.14 0.86
Austria 51.58 28.57 28.82 83.33 70.00 47.20
Bahamas 100.00 100.00 100.00 100.00 100.00 100.00
Belgium 67.84 91.54 66.07 62.50 91.00 28.08
Bermuda 100.00 100.00 100.00 100.00 100.00 100.00
Botswana 55.25 37.14 47.32 91.66 98.00 2.15
British Virgin Islands 100.00 100.00 100.00 100.00 100.00 100.00
Bulgaria 55.56 71.42 25.63 62.50 96.00 22.27
Cayman Islands 100.00 100.00 100.00 100.00 100.00 100.00
China 58.30 28.57 42.83 100.00 95.00 25.10
Croatia 54.53 48.57 28.46 91.66 76.00 27.96
Curacao 72.04 100.00 61.96 100.00 96.00 2.26
Cyprus 71.12 64.28 59.82 83.33 100.00 48.20
Czech Republic 58.89 45.71 35.71 79.16 100.00 33.86
Denmark 51.70 37.14 26.76 79.16 75.00 40.45
Estonia 66.52 100.00 42.85 79.16 93.00 17.59
Finland 55.03 42.85 33.92 79.16 78.00 41.21
France 55.70 1.62 77.20 58.33 78.00 63.33
Gambia 47.99 22.85 16.58 100.00 100.00 0.51
Germany 52.33 34.77 37.03 70.00 73.00 46.88
Ghana 49.49 28.57 38.64 83.33 96.00 0.90
Gibraltar 65.59 100.00 35.45 92.50 100.00 0.00
Greece 39.05 17.14 38.39 83.33 46.00 10.41
Guernsey 97.50 100.00 100.00 87.50 100.00 100.00
Hong Kong 73.02 100.00 47.32 94.16 100.00 23.65
Hungary 69.09 74.28 51.73 83.33 93.00 43.13
Ireland 75.66 99.98 62.50 71.66 95.00 49.18
Isle of Man 100.00 100.00 100.00 100.00 100.00 100.00
Italy 50.54 23.14 49.51 75.00 78.00 27.07
Jersey 98.33 100.00 100.00 91.66 100.00 100.00
Kenya 50.83 14.28 60.71 83.33 95.00 0.82
Latvia 68.12 100.00 44.64 87.50 93.00 15.48
Lebanon 72.84 100.00 67.85 79.16 100.00 17.18
Liberia 48.95 28.57 32.39 86.66 97.14 0.00
Liechtenstein 69.50 64.28 67.85 100.00 100.00 15.39
Lithuania 54.82 57.14 47.32 83.33 78.00 8.33
Luxembourg 72.43 99.14 58.92 70.83 93.00 40.27
Macao 56.65 65.71 33.26 83.33 100.00 0.94
Malta 73.51 85.71 70.53 79.16 93.00 39.15
Mauritius 79.83 100.00 75.00 91.66 100.00 32.50
Monaco 67.55 100.00 51.78 79.16 100.00 6.83
Montserrat 65.40 100.00 51.78 83.33 91.42 0.45
Netherlands 78.01 93.02 66.07 87.50 90.00 53.46
Panama 71.78 100.00 57.24 100.00 97.14 4.53
Poland 40.44 45.71 10.10 75.83 51.00 19.59
Portugal (Madeira) 45.84 14.28 53.57 75.00 76.00 10.34
Romania 55.60 54.28 38.39 91.66 75.00 18.68
San Marino 61.51 51.42 39.84 100.00 100.00 16.28
Seychelles 68.10 100.00 62.50 93.75 70.00 14.29
Singapore 81.35 100.00 76.78 95.83 100.00 34.15
Slovakia 52.95 40.00 44.10 70.83 86.00 23.81
Slovenia 49.57 45.71 31.83 75.00 76.00 19.30
South Africa 47.12 20.00 32.92 77.08 73.00 32.61
Spain 54.53 28.57 55.35 62.50 78.00 48.26
Sweden 55.97 37.14 37.50 79.16 75.00 51.05
Switzerland 83.31 92.54 65.17 100.00 100.00 58.84
Taiwan 46.76 42.85 30.35 75.00 79.00 6.59
Tanzania 46.08 14.28 34.05 99.16 82.14 0.76
Turks and Caicos Islands 100.00 100.00 100.00 100.00 100.00 100.00
United Arab Emirates (Dubai) 98.33 100.00 100.00 91.66 100.00 100.00
United Kingdom 63.45 45.71 55.35 58.33 93.00 64.86
USA 43.21 40.00 37.85 76.66 27.85 33.67