Create a 5 page essay paper that discusses Tax Havens or Off Shore Financial Centre.
Download file to see previous pages…
Economic federations typically struggle with the impact and desirability of tax policy diversity among member states. In particular, there is widespread concern that low-tax areas within a federation impose a fiscal externality on other countries and might attract investment that would otherwise locate in high-tax areas within the same regions. There are no reliable estimates of the magnitude of such diversion. Moreover, there has been little consideration of the possibility that the availability of low-tax jurisdictions facilitates foreign investment and economic activity in high-tax jurisdictions within the same regions. The latter possibility arises if affiliates in low-tax areas offer valuable intermediate goods and services to affiliates in high tax areas, if the ability to relocate taxable profits into low-tax jurisdictions improves the desirability of investing in high-tax areas, or if low-tax jurisdictions facilitate deferral of home country taxation of income earned in higher-tax countries. High-tax countries might then benefit from tax diversity within regions, particularly if domestic governments would prefer to offer tax concessions to multi-jurisdictional businesses but are constrained not to do so by non-economic considerations.

Leave a Reply

Your email address will not be published. Required fields are marked *