Corporate haven

From Wikipedia, the free encyclopedia

A corporate haven is a jurisdiction with laws friendly to corporations thereby encouraging them to choose that jurisdiction as a legal domicile.

[edit] History

Corporate Havens are a post 1970s^{[citation needed]} global economic phenomena. This decade more or less marked the end of colonialism and the formation of EU in the form of the EEC. Many legal and taxation processes culminated in this decade that led to the formation of Tax Havens and Corporate Havens throughout the developed world.

[edit] Geographical distribution

[edit] North America

Within the United States, Delaware is considered the pre-eminent corporate haven for large public corporations, while Nevada, Wyoming, and Alaska are corporate havens for small closed corporations.

Delaware, through its developed legal system and laws protecting shareholder rights, is geared toward the large complex public corporation, whereas Nevada and Wyoming are more attractive to the small privately held corporation. Delaware law tends to protect the rights of boards of directors and shareholders, while Nevada and Wyoming tend to favor management.

[edit] Commonwealth & Western Europe

Corporate havens outside the United States include British crown colonies such as

Bermuda
Cayman Islands
Gibraltar (for financial services, and incorporation)
Saint Helena -- for trans-shipping only, still in development

Internal to the UK, but globally used as corporate havens

Guernsey (for incorporations, offshore back office services)
Isle of Man (for incorporations, offshore back office services)
Jersey (for incorporations, offshore back office services)

UK Crown Colonies do not have exclusive monopolies on offering corporate havens, other notable havens include

Andorra
Zug, Switzerland
Dutch Crown Colonies: Aruba, Bonaire and Curaçao
Nauru (mostly for financial services, and banking)

These havens are widely used by people and other entities from various places, particularly Hong Kong.

Increasingly, U.S. corporations are using these havens, either by incorporating subsidiary corporations in these locations or by moving their corporate domicile (the home company of the corporation) there.

Corporate havens are often not beneficial to small corporations operating in one legal jurisdiction because of the complexity of creating a corporation elsewhere and then having to re-register in the local area as a foreign corporation.

[edit] North American legal issues

United States tax law (since the 1980s) has made these offshore corporate havens very unattractive to individual citizens. US citizens are statutorily taxed by the U.S. government on their world-wide income, unlike the citizens of all other nation states.

It must be noted that tax deductions and tax credits are allowed to individual citizens in certain instances for income from foreign sources to avoid double taxation.
The US still has very spotty double taxation treaty system^{[citation needed]}, so the need for many Tax Havens will not go away any time soon.

Revenue Canada loses billions each year to the Tax Haven phenomena.

The US, for many Canadians is used as a tax haven.
Canada's tax system has tended (under mostly Tory governments^{[citation needed]}) to move towards being more like a Caribbean tax system.
Canada has no taxes on Lottery winnings or any Estate Transfer taxes. These would typically be taxed in most European Tax Havens.

[edit] Offshore financial centers

From IMF coverage ([1]).

Offshore Financial Center	IMF Member	Historical Association with IMF Member	Population (million)	Licensed Banks (number)	Supervisory Authority
Group I
Dublin	Yes	Capital city of the Republic of Ireland	1.1	54	Central Bank of Ireland
Hong Kong	No	Former British territory; Special territory of China since 1997	6.85	454	Hong Kong Monetary Authority
Group II
Andorra	No	Association with France and Spain	0.06	n.a.	n.a.
Bahrain	Yes	UK independent since 1971	0.62	102	Bahrain Monetary Agency
Bahamas	Yes	UK independent since 1973	0.3	418	Central Bank of the Bahamas
Cayman Islands	No	British Overseas Territory	0.04	575	Cayman Islands Monetary Authority
Cook Islands	No	In Free Association with New Zealand	0.02	n.a.	n.a.
Marshall Islands	Yes	n/a	0.07	n.a.	n.a.
Nauru	No	Former United Nations Trustee	0.01	n.a.	n.a.
Niue	No	In Free Association with New Zealand	0.002	n.a.	n.a.
Samoa	Yes	n/a	0.17	n.a.	n.a.