Tax havens are the name given to countries with extremely low tax rates or no rate at all. Almost 15%-25% of the countries across the world are tax havens. Initially, it was only in individuals who used to take advantage of these so called tax havens by relocating themselves to these countries in order to take advantage of the lower tax structure.

But offlate, may companies have started to establish subsidiaries in these tax havens in order to take advantage of low tax structure vis-à-vis their home country.

A tax haven country, no matter how small it is attract large no of huge companies. Although these tax haven countries offer absolutely nothing to the investors in terms of operational or any other efficiency, but still it is the most sough after country on account of its comparatively lower tax structure. Tax haven countries have nothing to loose as they make merry on the piles of money coming in their country through registration and administrative fees paid by the companies who are setting up subsidiaries in their countries.

In the past decades, the inflow of money in these tax havens has increased so much so that it has caught the attention of entire world. Its not necessary that all the money that flows in to these so called tax havens is illegal, but most of the times the capital that is placed in these tax havens are undeclared for tax purpose. Infact, in a startling revelation in top notch countries such as US & UK, it was found out that around 5 % of their country’s funds placed in the tax havens are not declared for tax in their home country. With the increasing no of tax havens, most of the companies/MNC’s are indulging in tax evasion, rather than focusing on running their operations smoothly.

All these tax havens have created lot of havoc as most of the developed and industrialized countries feel that these tax haven countries decrease the tax revenue, which otherwise would have been rightfully theirs.  There are long list of countries which can be safely termed as tax havens such as Andorra, Bermuda, Kuwait, UAS, Dubai, New Zealand, Russia, Switzerland, Mauritius, Cayman Islands and the list goes on and on.

The Entire world including the US president Barack Obama is up in arms against fighting the tax haven menace. In order to counter these growing tax haven menaces, all the victim countries have vowed together to take stringent action against these tax havens, who uptil now have managed to escape from all the regulatory attention. These tax havens must be cornered and face tighter rules and regulations.