In 2009, the governments of the 20 wealthiest countries in the world vowed that they will tighten the regulations that enabled rampant tax evasions in their own nation and territories. The major problem that these countries faced was the high level of secrecy when it comes to withholding the financial assets of clients from the authorities. However, two years later, despite the increase in such regulations, people were still left with a great number of countries to choose from that will allow them to evade their taxes through the use of offshore accounts. This was according to a report made by the Tax Justice Network.
The report, which the Tax Justice Network referred to as the Financial Secrecy Index, assessed 73 different jurisdictions around the world that allowed billions of foreign currency to be stored in offshore accounts. The money that was deposited into these accounts were also left untaxed. The report found that governments worldwide lose approximately $250 billion in revenue every year because of these offshore accounts.
This list is comprised of the 10 biggest tax havens in the world – countries that allow the highest level of client financial secrecy, tax evasion, and offshore accounts.
Bahrain, situated near the Persian Gulf’s western shores, is a small island-country. The archipelago’s largest island is Bahrain Island. While there are plenty of financial institutions offering offshore banking services and bank accounts in the island, its client financial secrecy is the lowest of all the other nations included in this list. Bahrain gets tenth place because it has the lowest level of Financial Secrecy Index value based from the Tax Justice Network’s report, which is at 660.3. It also has a Secrecy Score of 78.
Germany makes it easy for people to open offshore bank accounts. However, this has also resulted in the increasing number of individuals opening such accounts so they can evade their taxes. The good news is that the country is trying to control this problem through the implementation of stricter and much more stringent policies. In the report, Germany got a score of 669.8 for its Financial Secrecy Index value, and a Secrecy Score of 57.
Many of the offshore banks in Japan do not subject the deposits made by their clients to interest rate standards and regulations. Fortunately, with the offshore banking center that has been established in Tokyo, the country’s law enforcement authorities would at least be able to monitor and control any developments in these financial institutions.
Jersey is a British Crown Dependency that houses a great number of banks offering offshore accounts to foreign clients. Offshore banking and investments has been a part of the bailiwick’s underground economy. In the Tax Justice Network report, Jersey got a Financial Secrecy Index value of 750.1 and a Secrecy Score of 78.
Singapore, an island city-state in Southeast Asia, is considered by many as one of their best choices for opening offshore bank accounts. Almost anyone can open such a bank account without experiencing any hassle. This is one of the major reasons why Singapore was graded with a Financial Secrecy Index value of 1,118 and a Secrecy Score of 71 by the Tax Justice Network.
The states of Nevada and Wyoming are two of the major contributing factors to the country’s increasing problems in terms of tax evasion. In Nevada, there are no capital gains, gift tax, personal income tax, and inheritance tax. In Wyoming, there are no corporate taxes, inventory taxes, unitary taxes, gift taxes, estate taxes, personal income taxes, franchise taxes, and inheritance taxes.
4 Hong Kong
In the People’s Republic of China, there are two Special Administrative Regions, with Hong Kong being one of them. It is located at the south coast of China and is surrounded by the South China Sea and the Pearl River Delta. Seven million people live in the region. Aside from being a popular tourist hot spot, Hong Kong is also a haven for people who do not want to pay their taxes and deposit large amounts of money in offshore accounts. Here, clients do not have to pay for sales taxes, capital gains, and payroll taxes. They also do not have to worry about personal tax being deducted from their money.
One of the members of the European Union, the United Nations, Benelux, OECD, and Nato, Luxembourg is a country that reflects political consensus as it is in favor of economic, military, and political integration. The country’s capital city, which is also the largest, is the city of Luxembourg. In the Tax Justice Network report, the country got a Financial Secrecy Index value of 1,621.2 and a Secrecy Score of 68, which renders it at third place on our list.
2 The Cayman Islands
The Cayman Islands, a British Overseas Territory situated in the western part of the Caribbean Sea, is comprised of three different islands. There is the Grand Cayman, the Cayman Brac, and the Little Cayman. These islands are located northwest of Jamaica and to the south of Cuba. In the Cayman Islands, people who are looking to evade their taxes get the full package. They do not have to pay for personal income taxes, capital gains, corporate taxes, and payroll taxes. The country does not even withhold tax on foreign clients.
Switzerland takes the number one spot in this list of the 10 biggest tax havens in the world for several reasons. One of these is because the country implements an extremely high level of secrecy when it comes to the financial assets of its clients. While it is true that there are other jurisdictions that allow for even greater secrecy such as the Bahamas and Bermuda, Switzerland beats them because the country operates on a much larger scale. It is also because of the fact that the bank accounts managed in the country are also operated on a massive scale. The offshore accounts here have partial or full tax exemptions, depending on the private bank.