Document Type

Article

Publication Date

1-2010

Abstract

In movies and novels, tax havens are often settings for shady international deals; in practice, they are rather less flashy. Tax havens are countries and territories that offer low tax rates and favorable regulatory policies to foreign investors. For example, tax havens typically tax inbound investment at zero or very low rates and further encourage investment with telecommunications and transportation facilities, other business infrastructure, favorable legal environments, and limited bureaucratic hurdles to starting new firms. Tax havens are small: most are islands; all but a few have populations below one million; and they have above-average incomes. Tax havens are also known as “offshore financial centers” or “international financial centers,” phrases that may carry slightly differing connotations but nevertheless are used almost interchangeably with “tax havens.”

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