A corporate tax haven is a territory that provides favorable tax circumstances and a liberal tax environment for corporations to set up their businesses. More often than not, corporate tax havens are offshore territories. Such include the British Virgin Islands, Singapore, Hong Kong and the Bahamas.
In corporate havens, tax regimes are designed to attract corporations to the territory to set up businesses within the territory and most corporate tax havens provide a zero-taxation regime that is available for international businesses, known as International Business Companies (IBCs) that set up their businesses in the territory from other parts of the world. For companies that derive profits and incomes from outside of the territory need not carry any taxation burdens on their incomes and profits at all. Most corporate havens will impose a zero-taxation scheme, while some others will impose a very minimum tax rate that amounts only about 1 and 2.5% on the corporations’ annual earnings. Such territories are known as low-tax territories or jurisdictions. One example of such a low tax jurisdiction is Barbados.
Corporate tax havens do not only protect corporations from taxation. They also protect the privacy of the corporations as well. In most of the corporate tax havens, it is lawful that the corporations’ financial records and statements will not and need not be exposed to government authorities or publicly filed. As such, the corporations will retain and maintain financial privacy for their companies set up in corporate tax havens. Even though some low-tax jurisdictions require some registered filing of annual returns and accounting records, many international companies are still able to take advantage of corporate tax havens in such that these territories do not have any treaties signed with government authorities, including the home government of the international corporation. As such, corporations have the advantage of not disclosing financial progress and statements to the government authorities of their home countries, which may very well impose a tax on their profits and incomes if such financial information were otherwise disclosed.
On top of all that were mentioned, corporate tax havens often offer offshore banking and allow corporations to set up international bank accounts. The privacy of corporations are also taken care of with the respect of banking as well, as various laws are in place in corporate tax havens to ensure that banks keep information about bank account holders private. As such, corporations still enjoy banking secrecy with their banking processes and need not worry about any disclosure of their bank accounts or banking information.
Overall, corporate tax havens protect companies from improper disclosure of information and threat to company privacies and maintain such characteristics in the name of the law within the jurisdiction. Corporations that set up businesses and companies in corporate tax havens almost certainly enjoy strong asset protection and confidentiality and privacy protection in such territories, which therefore allow international corporations in such territories to be able to thrive and grow without worry or unnecessary burdens.