The Concept Of Offshore Tax
August 13, 2008
The important concept to remember about about benefiting from offshore tax havens is that the control and management of the tax generating entity (be it a company, a Trust or a Foundation) must be in the low or zero-tax jurisdiction.
Large companies utilise offshore jurisdictions to maximise the profits of their shareholders whilst ensuring their prices are rock bottom for consumers. A number of supermarket chains have been critised for there methods of tax effective savings - whilst supplying their goods at reasonable costs for shoppers and employing many thousands of people within the country of sales.
Many high-tax jurisdictions such as the United Kingdom and Germany have tried to attract headquarters’ offices and functions using a concept called the ‘coordination centre’.
Originally pioneered in Belgium, it is now seen in many countries throughout the world. Essentially, the high tax country will allow a resident corporation to continue its functions outside the normal tax laws. It is then able to use functions such as cross border intra-group trading or’re-invoicing’ to escape any witholding tax or other taxes.
Taxation of coordination centres is ‘by agreement’ between the corporation and the host country,
and is usually minimal. This is one of the ways in which high-tax jurisdictions, which are nominally against low-tax areas, play the game themselves.
Comments
Got something to say?
-
Recent Posts
Advertisements
