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Tax Haven

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Maxime Berardi

on 6 February 2015

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Transcript of Tax Haven

By Eva Tardy
By Maxime Berardi
The real spelling of aid is t.a.x.

Jeffrey Owens
Head of tax at the OECD
What is a tax haven ?
Solutions to regulate tax havens

Summary of the facts:


€1.25
Tuesday, February 5th 2015
Master 1 Finances
In This Week Edition:
Tax Havens
Brought to you by: Eva, Cyril, Pierre & Maxime
Eva
will introduce the subject and cover the basics of tax havens

Cyril
will speak about the structures

Pierre
will introduce you the possible consequences

Maxime
will deal with some basic solutions to avoid tax havens
An aggravating factor of the debt crisis


Who are the actors ?

A brief look at the
Country-by-Country Reporting

Is there a need for a World Taxation Organization ?
Unitary Tax
Push bodies to take actions
Let's play
Develop an Unitary Tax
Taxing corporations according to the real economic substance of where they actually do business
More income for poor countries

Push bodies to take actions
No real solution but public pressure can make the difference
Sources
Thank you for
your attention

Country-by-Country Reporting
A World Tax Organization ?
Unitary Tax
Push bodies to take actions
By Cyril Moulin
Financial structures for individuals and companies
What is a Tax Haven ???
Tax
Let's Split the Words!!
+
Haven
Fee paid to the government
A place of safety
tax havens are low-tax jurisdictions that provide companies, investors and individuals opportunities for
tax avoidance
and
evasion
"
"
Three factors characterizing a tax haven:
1. Nil or only nominal taxes
2. Lack of transparency
3. Protection of personal financial information

Tax Avoidance
Tax Evasion
Banking Secrecy

&

Legal Secrecy
According to the OECD
&
Let’s check what you remember

How long do you have to stay in a country to be considered as a resident?

?

Company

Financial risks

This vehicle can be used by a company to isolate the firm from financial risks

A

N

_ _ _ _ _ _ _ _ _ _ _ _

RULING

TAX

INVESTIGATION

Trust
SUBSIDIARY

6 months and 1 day

SPV
Luxembourg Leak

NOMINEE ACCOUNT

Individuals
Companies
Living in a Tax Haven
- Tax avoidance
- Moving to a country or being a traveler
- Bilateral taxation treaties
Using Offshore Trusts
- Actors : Donors, Trust, beneficiary

- Assets : Portfolios, real or intellectual property, bank deposits
- Objectives : Asset protection, low taxation
Opening a bank account in a Tax Haven
- Legal and illegal aspects
- Tax planning
- Code accounts
- Banks implication
Use of Nominees
- Legal aspect
- Nominee Account
- Objectives : Hide identity, manage income
- Banks in the heart of the system
Offshore Corporations
- Non-resident companies
- The legal and registered address
- Favorable laws and regulations
- Tax advantages
- Tax Optimization
Cases:

- Ireland

- Luxembourg

- Delaware
Special Purpose Vehicle
- Prevent financial risks
- Hide debt or ownership, dissimulate obscure relationships
Notional Interest
- Belgium
- Deduce interests
- Encourage investments
Company
Financial risks
SPV
Countries will be able to call companies to account at last
A blast of transparency that could change the world
Improve the quality of life in poor countries

Put the problem in the agenda


Try to control multinational corporation

Where are located tax havens?
tax avoiders/evaders
multinational companies


banks
tax havens governments
hedge funds
accountants
lawyers
To tax havens !
Where has all the money gone ?
Why those countries have low tax rates?
How does it work ?
Small territories with few natural resources
Want to attract capital


Low tax rates
Can develop themselves thanks to important tax revenues
3 different types of Tax Havens
Primary tax haven
" Location where capital winds up.
Subsidiary shell companies collect profits from corporate intellectual property by transfers from their parents. "
Semi-tax haven
" Location that produces goods for sale primarily outside their territorial boundaries and have flexible regulations to encourage job growth such as free trade zones. "
Conduit tax haven
" Location where income from sales, primarily made outside their boundaries, is collected, and then distributed. "
What is capital flight ?
Question 5:  When the intellectual property is transferred to a subsidiary to reduce taxes, it is:  

 
a. Primary tax haven

b. Semi-tax haven

c. Conduit tax haven
 


Question 4:  What is the Ugland House?

 
a. A bank in Switzerland

b. A building hosting thousands of companies in the Cayman Islands

c. a prison for tax offenders
 




Question 3:  According to the OECD, how many factors characterize a tax haven?

 
a. 3

b. 5

c. 7



Question 2: A deliberately under-reporting or omitting income is considered as: 

a. Tax evasion

b. Tax avoidance

c. Tax increase
 


Question 1: What is capital flight?



a. Capital flying away on holidays

b. The name of an airline company

c. Money that flows out from a country to another

Multiple choice questionnaire

c. Money that flows out from a country to another
a. Tax evasion
a. 3
- Lack of transparency
- Nil or only nominal taxes
- Protection of personal financial information
b. A building hosting thousands of companies in the Cayman Islands
a. Primary tax haven

Consequences of Tax Havens
By Pierre Brunet
An Economic Disruption
Do you now the largest exporter of banana in Europe ?
Which country is the first investor in India ?

Where the most profitable employee in the world come from?
Jersey
Maurice Island
Bermuda
Effects on the Market
"Transparency is one of the silent prerequisites of any free and efficient market."

Investopedia
Enron Case :
Tax Havens, Partner of international criminal
- Money laundering : Money laundering refers to a financial transaction scheme that aims to conceal the identity, source, and destination of illicitly-obtained money. Tax evasion and false accounting practices constitute common types of money laundering. "legal information institute"

- A very long trip around the world to launder this money, bank to bank, tax haven to tax haven, country to country...
- This money becomes untraceable for authorities.
Developing countries are taking action to try to combat tax avoidance by multinational companies.
Zambia and Mongolia have told the BBC they want to stop mining companies shifting profits out of their countries before they can be taxed.
Both are major producers of minerals and say they lose billions of dollars a year in much-needed tax revenue.
A Forgotten Victim
Welfare State
Underground Economy
AID (international)
TAX
Money Laundering
ENRON
Transparency
tackletaxhaven.com

The Economics of Globalization: Policy Perspectives from Public Economics
, by Assaf Razin,Efraim Sadka

Oecd.org

taxhavensguide.com : "What is a tax haven?"

"Tax havens explained: How the rich hide money"

Theguardian.com

Encyclopedia Britanica / Investopedia

Le Monde







G
A
M
E
S
Common tax policy
Regulatory body
But too difficult to implement

Country-by-Country
Reporting
G20 Summit
Think about a
World Tax
Organization
Full transcript