A corporate haven is a jurisdiction with laws favourable to corporations resulting in corporate promoters selecting the jurisdiction as the place of incorporation or legal domicile.
Video Corporate haven
History
Corporate havens are a post 1970s global economic phenomenon. This decade more or less marked the end of colonialism and the formation of EU in the form of the EEC. Many legal and taxation processes culminated in this decade that led to the formation of tax and corporate havens around the world.
Maps Corporate haven
Geographical distribution
North America
In the United States, Delaware is considered the pre-eminent jurisdiction for incorporation of both domestic and foreign large public corporations, while Nevada, Wyoming, Alaska, Puerto Rico, and the U.S. Virgin Islands are considered favourable for small closed corporations.
Delaware, through its developed legal system and laws protecting shareholder rights, is geared toward the large complex public corporation, whereas Nevada and Wyoming are more attractive to the small privately held corporation. Delaware tends to protect the rights of boards of directors and shareholders, while Nevada and Wyoming tend to favor management. In the U.S. Virgin Islands, aside from the fact that there are no property and import taxes, it has been successful in luring small businesses in investing in the economy with generous tax breaks. Companies receive a 90% tax and a personal income tax cut. Puerto Rico recently opened as a corporate tax haven for American citizens. Non-Puerto Rican citizens who move to Puerto Rico from anywhere in the U.S. receive automatic tax incentives and a 100% tax break. The same incentives are offered to small corporations that are not Puerto Rican, but move their office(s) there.
Commonwealth and Western Europe
Corporate havens outside the United States include British overseas territories such as:
- Bermuda -- according to the Foot report Bermuda is the third largest reinsurance centre in the world and the second largest captive insurance domicile
- British Virgin Islands -- the leading corporate domicile in the world, with nearly 500,000 active registered companies
- Cayman Islands -- the leading jurisdiction for hedge funds
- Gibraltar -- for financial services, and incorporation.
and British Crown dependencies:
- Guernsey -- for incorporations, offshore back office services
- Jersey -- for incorporations, offshore back office services
- Isle of Man -- for incorporations, offshore back office services.
Other havens include
- Andorra
- Zug, Switzerland
- Dutch Crown colonies: Aruba, Bonaire and Curaçao
- Nauru -- mostly for financial services, and banking.
Increasingly, multinational corporations are using the leading corporate havens, either by incorporating subsidiary corporations in these locations or by moving their corporate domicile (the home company of the corporation) there.
Corporate havens are often not beneficial to small corporations operating in one legal jurisdiction because of the complexity of creating a corporation elsewhere and then having to re-register in the local area as a foreign corporation.
North American legal issues
Since the 1980s, United States tax law has rendered offshore corporate havens very unattractive to individual taxpayers. US citizens are statutorily taxed on their worldwide income, unlike the citizens of many other country.
- Tax deductions and tax credits are allowed to individual taxpayers in certain instances for income from foreign sources to avoid double taxation.
The Canada Revenue Agency loses billions each year to the tax havens.
- for many Canadians the US is used as a tax haven.
- Canada has no taxes on lottery winnings or any estate taxes. These would typically be taxed in most European tax havens.
See also
- Corporation Trust Center (CT Corporation), 1209 North Orange Street, Wilmington, Delaware, home to over 6,500 Delaware corporations
- Corporate Inversion
- Internal affairs doctrine
- Luxembourg leaks
- Offshore financial centre
- Tax haven
- Tax treaty
- Tax exporting
- List of company registers
Notes
External links
- International Financial Centres Forum (IFC Forum)
- Offshore Banking and Financial Centers
Source of article : Wikipedia
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