Tax haven is a tax jurisdiction where tax rates and tax disclosures are low for entities and persons. Tax havens are typically small countries or jurisdictions, with low or nil taxation for foreigners who would like to establish business there. Accompanying this low tax is the all-important feature that they offer strong confidentiality or secrecy regarding wealth and accounts. This confidentiality or secrecy makes them the darlings of people who are keeping unaccounted wealth.
In addition to the above, the tax havens contain some accessory features that support the corporate arrangements for tax avoidance. Companies can be established with least regulatory restrictions and minimum disclosures about the company and its creators. This liberal regulatory environment allows companies to have opaque existence, where an entity can easily be set up without indulging in any meaningful commercial activity. At the same time, such a company can claim to be a genuine business unit. All these make the tax havens highly desirable locations for multinational entities wishing to reduce their global tax liabilities.
