Tax Havens And Its Effects On The Nations

1622 WordsMay 18, 20167 Pages
1. Introduction It is widely known that Tax Havens have a terrible influence on the nations. For some individuals or corporations, Tax Havens do bring some tax saving; countries, however, suffer a long-term tax, and capital lose from Tax Havens. Nowadays, many countries are trying to eliminate the harmful effects that Tax Havens bring, but Tax Havens still exist in the world. The punishments do not act effectively as people expected. If policy makers want to solve the problems of Tax Havens, they need to understand the nature of Tax Havens and what create Tax Havens before making new regulations to restrict individual or companies’ foreign investment or business activities. Once they know the reasons, they can use a more efficient way to deal with Tax Havens. Many papers have discussed how bad Tax Havens are, and how many losses Tax Havens bring, however, there are fewer articles written about when do Tax Havens start and why do Tax Havens happen? The purpose of this journal is to help readers to understand why Tax Havens exist in the world in the first place and provide different thoughts for some governments. In this article, the supply and demand theory will be used to find out the reasons why Tax Havens exist. There are two major research questions in the paper. From the supply side, the question is that what kind of countries is willing to become Tax Havens? From the demand side, the question is that why people and companies need Tax Havens? In this paper, to better
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