Tax haven

A jurisdiction that attracts foreign individuals or businesses through low taxes, financial secrecy, or rules that facilitate minimizing tax liabilities.

Offshore financial centre: A jurisdiction that provides financial services to nonresidents, often with limited domestic-market activity. Tax havens commonly operate as offshore centres, hosting entities and accounts for foreign clients.
Tax evasion: The illegal concealment or misrepresentation of income or assets to avoid taxes owed. Tax havens can facilitate evasion, but using a low-tax jurisdiction is not inherently illegal.
Corporate tax rate: The rate at which a government taxes the taxable profits of corporations. A low headline corporate rate is one common, but incomplete, indicator of haven status.
Cayman Islands: A British Overseas Territory in the Caribbean and a major centre for offshore funds and financial services. Its fund industry makes it a prominent example of a jurisdiction associated with tax-haven activity.
Shell corporation: A company with little or no independent operations, often used to hold assets or conduct transactions. Shell companies can separate legal ownership from the people benefiting from offshore assets.
Tax avoidance: The reduction of tax liabilities through arrangements that comply with the law, though they may conflict with its purpose. Haven-based structures often pursue avoidance by exploiting differences between national tax rules.
Bank secrecy: Legal or institutional restrictions on disclosing information about bank customers and their accounts. Financial secrecy distinguishes some havens even when their tax rates are not exceptionally low.
Jersey: A self-governing Crown Dependency in the Channel Islands with its own tax and financial-services systems. Jersey shows how a small jurisdiction can build an international finance sector with distinct tax rules.
Transfer pricing: The pricing of transactions between related entities within a multinational enterprise. Multinationals can use related-party prices to shift taxable profits between jurisdictions.
Tax gap: The difference between taxes legally owed and taxes actually paid on time. Offshore concealment and profit shifting can widen the gap between assessed and collected revenue.

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