A Brief Note On Tax Policy Center ( 2016 )

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According to Tax Policy Center (2016), the income taxes from corporation and individuals have been the largest tax revenue resources in UK for past 50 years. Although zero or extremely low income taxes are applied in the tax haven countries to non-resident individuals and companies, the reason behind that the tax haven countries can be still beneficial is in increasing inward foreign investment. According to Dharmapala and Hines (2009) and Mara (2015), the host country can attract significantly greater foreign investment which is the source of the other tax revenue, such as VAT. The country can lower the corporate tax rate without serious impacts on the domestic tax revenue because the countries have relatively small population. With the…show more content…
IMF (cited by Tax Justice Network, 2016) estimated $660 billion or more corporate money shifted to tax havens for the purpose of avoidance or evasions in 2012 which is same with 0.9% of world GDP. Johnston (2016) added that total hidden offshore wealth may reach $ 36 trillion. Based on the 2014 net world GDP, $240 trillion, approximately 15 % of wealth is hiding in the tax havens. The hidden wealth of individuals and corporations is increasing year and year and it is the significant reason of constant government tax revenue loss and it makes poor country much poorer (Zucman, 2014; Zucman, 2015; Oxfam, 2016; Miller and Oats, 2016; and Tax Justice Network, 2016). From the panama papers and other data leaks, users of tax havens revealed are categorized by two types, the multinational groups, such as Google, Amazon and Apple, and the individuals. The individuals, whose details are still in secret partly, are more likely to use tax havens in order to “evade” taxes by hiding their assets and wealth in secrecy (Miller and Oats, 2016). The multinational groups tend to use tax havens to “avoid” and defer the tax payment on profits legally. The tax haven governments offer favourable tax planning opportunities for the multinational groups and companies by reducing their tax rates and the reduced worldwide average tax rate (Miller and Oats, 2016). The rest parts will more focus on the corporate users of tax haven, especially FDI and
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