The economy of tax havens - Pros and cons

Résumé du document

Tax evasion and tax avoidance that are more easily achieved thanks to the internationalisation of the economy are also often considered as plagues against the creation of a fair international economic environment, preventing countries from accessing essential financial resources for their development and/or growth. The number of tax havens has grown dramatically since the 1970's, most of the governments being unable or unwilling to go against this tendency (Escario Diaz-Berrio, 2011). Nonetheless, this situation seems to be about to change, as an increasing number of measures are taken worldwide in order to take those havens down and get that money back to their home nations. But what makes those low-tax countries, so appreciated by companies and some individuals, the target of other countries in the world? Ultimately, are those arguments reasonable enough to justify why a lot of countries try to eradicate such practices?

Extraits

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[...] Secondly, the Norwegian Ministry of Foreign Affairs argues that tax havens may cause an “unequal division of tax revenues”. Their view is based on a concept of international law that states that when a person resident in a certain country has taxable activities in another country, this person should be taxed in his/her country of residence because that person has, generally speaking, more ties with that country. This means that for example, if a Belgian works in Northern France, his/her incomes will be taxed in Belgium even if they were effectively made in France. [...]

[...] Indeed, there is an indirect effect on countries that benefit from international aid, as the amount of money they receive from richer countries may decrease, those facing their own financial difficulties. The estimated amount of money that would be hidden in tax havens could cover more than the half of the amount estimated by the Tax Justice Network in order to erase world poverty and hunger by 2015. Thus, it can be considered that tax havens play a major role in the likely non-achievement of the so-called Millennium Development Goals set up in 2000 by the United Nations (Van Dijk and Weizig, 2008). II. [...]