Awards & Recognition
Identifying the Top Tax Havens for Companies
While no individual or entity enjoys paying taxes, taxes are the engine that makes modern American society and modern civilization possible. Without tax revenues provided by individuals, small businesses, and major corporations the infrastructure that has made America the envy of the world will deteriorate. Thus it is unsurprising that people and companies who avoid their tax obligations, through means that are legal or otherwise, are often identified and shamed by the media.
Media publications, including the New York Times and the Washington Post, have identified and discussed a number of strategies employed to minimize or eliminate corporate or capital taxes and the responses to these strategies. A 2012 New York Times article discussed Apple’s role in pioneering the Double Irish with a Dutch Sandwich – a corporate structure and series of financial transfers that exploits loopholes in Dutch and Irish tax law. A recent Washington Post article details efforts to close the water’s edge tax loophole by identifying and requiring reporting for activities in known tax havens.
This infographic is designed to better familiarize you with the major international capital and top tax havens for companies. Furthermore, this infographic identifies the Fortune 500 companies with the greatest amount of funds held in offshore accounts in relation to the number of subsidiaries utilized.
What is a Corporate Tax Haven?
A corporate tax haven is a state or country that structures its tax laws so as to attract corporations that are seeking to minimize their tax obligations. A number of characteristics that are common in corporate tax havens include:
• Few or no taxes for non-residents
• Zealous protection of corporate or personal information and a general lack of transparency and information sharing
• No requirement for a business to maintain a substantial local presence
• Markets itself as an off-shore financial center
Of these characteristics the second factor when present with the first is usually thought to be the most revealing of a jurisdiction’s status as a corporate tax haven. Corporations attempt to profit from the American consumer and commercial markets while avoiding their state and federal tax responsibilities. Corporations attempt to avoid corporate state taxes that can reach rates as high as 9.99 percent before accounting for federal corporate taxes which can range from 15 to 35 percent.
What is a Capital Tax Haven?
A capital gain is a profit that is realized through the disposition of a capital asset. A capital asset is property held by the individual or organization and can include real property, facilities, machinery, patents, trademarks, shares and securities. A capital gain occurs when the proceeds of its sale exceeds the purchase price. In contrast, when the disposition of the capital asset is for less than the purchase price a capital loss is realized.
Many countries, including the United States, impose a tax on capital gains. In the U.S. the highest state capital gains tax exists in California at 13.3 percent for 2013 – and that is in addition to the 20 percent federal rate and the 3.8 percent federal net investment income tax. Many companies attempt to use creative accounting practices and innovative corporate structures to minimize or eliminate their capital gains tax obligations.
If you are seeking tax guidance and advice contact the Tax Law Offices of David Warren Klasing by calling (800) 681-1295 or contact us online. We offer a reduced-rate initial consultation for your tax concerns.
