What is a tax haven? What is a corporate tax haven?

Tax havens form a global ecosystem where jurisdictions offer different mixes of facilities to mobile forms of financial capital. Corporate tax havens attract multinational companies by offering facilities to escape or undermine the tax laws, rules and regulations of other jurisdictions, reducing their tax payments in these jurisdictions.

(To see how we define, identify and measure corporate tax havens, look at the “What we measure” section).

Corporate tax havens are among the most important players in this system, but others exist. For example, our Financial Secrecy Index ranks ”secrecy jurisdictions” which attract illicit financial flows by providing laws and other facilities to hide that capital and its ownership from the public, or from the forces of law and order. There are also “regulatory havens” which provide facilities to help multinational corporations escape financial (and other) regulations. And so on. 

Ireland, for instance, is a very large corporate tax haven which is near the top of the Corporate Tax Haven Index, yet it is a relatively transparent jurisdiction with a fairly low ranking on the Financial Secrecy Index. Switzerland and Luxembourg, by contrast, are major secrecy jurisdictions and also very large corporate tax havens, so they rank high in both indexes.

Don’t be misled by a country’s headline tax rate: this rate might be bypassed through sweetheart deals between the tax administration and multinationals, and its tax system may well contain gaps and loopholes. Luxembourg, for instance, claims to tax corporate income at 26 percent. Yet LuxLeaks revealed that some multinationals were taxed at less than 1 percent.