What we measure

The Corporate Tax Haven Index thoroughly evaluates each jurisdiction’s tax and financial systems to create a clear picture of the world’s greatest enablers of global corporate tax abuse, and to highlight the laws and policies that policymakers can amend to reduce their jurisdiction’s enabling of corporate tax abuse.

Each jurisdiction ranked on the index is given two opportunities during the research process to feedback on and dispute the index’s results. This occurs when the preliminary findings are first prepared and when the final results are calculated. If a jurisdiction provides sufficient evidence that counters an assessment made by the index, the assessment is changed to reflect the evidence.

The research process involves collating a database of evidence-based evaluations. The database is a result of over a year of desk-based research by a dedicated team, and by numerous researchers around the globe. The cut-off date for the 2021 edition of the index is 30 September 2020 , after which changes in regulations are not guaranteed to be included in the jurisdiction’s evaluation for the 2021 edition of the index. For some indicators, more recent data has been included, and all jurisdictions had the opportunity to provide up-to-date information on their own country’s analysis in November 2020. The database is available to download in full here.

The database covers information on the legal, administrative, regulatory, and tax structures of jurisdictions. The main data sources are official and public reports by the OECD and its associated Global Forum, the IMF and the EU. Specialist tax databases and websites such as those by the IBFD, the "Big Four" accounting firms, and others have been consulted.

An overview of the Corporate Tax Haven Index’s methodology is provided below. The full methodology can be downloaded here.

How jurisdictions are ranked

Jurisdictions are ranked by their CTHI value (Corporate Tax Haven Index value), which is a measure of how intensely the jurisdiction enables multinational corporations to abuse corporate tax.

A jurisdiction’s CTHI Value is calculated by combining a jurisdiction's Haven Score and Global Scale Weight. A jurisdiction’s Haven Score is a measure of how much scope for corporate tax abuse the jurisdiction’s tax and financial systems allow, where a zero means the jurisdiction’s laws allow no scope for corporate tax abuse and a 100 means they allow unrestrained scope. A jurisdiction’s Global Scale Weight is a measure of how much of the financial activity conducted by multinational corporations around the world is hosted by the jurisdiction. Combining a jurisdiction’s Haven Score and Global Scale Weight gives a picture of how much of the corporate financial activity conducted around the world is put at risk of corporate tax abuse by the jurisdiction.

A high or low Global Scale Weight is neither good nor bad, but the higher a jurisdiction’s Global Scale Weight is, the greater the responsibility the jurisdiction has to guard against corporate tax abuse – and conversely, the greater the risk for corporate tax abuse the jurisdiction creates when it fails to uphold that responsibility.

This means a higher CTHI value does not necessarily indicate a jurisdiction has more aggressive tax laws, but rather that the jurisdiction’s laws and its position in the global economy combine to create a greater risk of corporate tax abuse by multinational corporations.

How jurisdiction’s Haven Scores are assessed

Each jurisdiction’s tax and financial systems are graded against 20 Haven Indicators to arrive at a final Haven Score, which is a measure of how much scope for corporate tax abuse the jurisdiction’s tax and financial systems allow. A score of zero means the jurisdiction’s laws allow no scope for corporate tax abuse and a 100 means they allow unrestrained scope.

Haven Indicators cover a range of laws, policies and practices such as the jurisdiction’s corporate tax rates, its public country by country reporting requirements and its deduction limits on interest payments. Haven Indicators consist of several sub-indicators, meaning each jurisdiction is graded against more than 70 data points. For each data point, the Corporate Tax Haven Index provides evidence to explain the jurisdiction’s grading. In-depth explanations of each Haven Indicator are available here.

Haven Indicators fall into 5 categories: Lowest available corporate income tax, Loopholes and gaps, Transparency, Anti-avoidance, and Double tax treaty aggressiveness. The jurisdiction’s final Haven Score is the average of the scores the jurisdiction receives for each category.

A jurisdiction’s Haven Score is more than just a report card, it’s a troubleshooting manual that spots the laws and loopholes that policymakers can amend to tackle global corporate tax abuse. Each jurisdiction’s Haven Score breakdown can be viewed in full detail on our country profile page for the jurisdiction.

How Global Scale Weight is measured

A jurisdiction’s Global Scale Weight is a measure of how much of the financial activity conducted by multinational corporations around the world is hosted by the jurisdiction. In other words, it’s a measure of the volume of financial activity conducted in the jurisdiction by multinational corporations.

The Corporate Tax Haven Index measures each jurisdiction’s Global Scale Weight by using data on foreign direct investment provided by the International Monetary Fund. Foreign direct investment is an investment from a party in one country into a legal entity, such as a corporation, that is based in another country. The investment is in the form of controlling ownership, or stock, in the legal entity.

In 2019, the IMF reported that over 40 per cent of the world’s foreign direct investment was “phantom” investments. Worth a total of $15 trillion, phantom foreign direct investment “passes through empty corporate shells” with “no real business activities”. Phantom foreign direct investment does not play any productive role in the economies which host it, instead it is moved around the world purely to “minimise multinationals’ global tax bill”.

By taking a jurisdiction’s Global Scale Weight into account when assessing its role in enabling multinational corporations to underpay tax, the Corporate Tax Haven Index goes beyond other tax haven “blacklists” by evaluating how much corporate tax abuse jurisdiction’s enable in practice, not just on paper. In a sense, a jurisdiction's Haven Score is a measure of how efficient of a tool its tax and financial systems make for multinational corporations to abuse tax with. And its Global Scale Weight is a measure of how frequently its tax and financial systems are used by multinational corporations as a tool. Combined together, the measures identify which jurisdictions serve as the most damaging tools in multinational’s toolbox for abusing tax.

For example, Anguilla, which was on the EU tax haven blacklist when the 2021 edition of the Corporate Tax Haven Index launched, received a Haven Score of 100 on the Corporate Tax Haven Index 2021. Meaning, the index found the jurisdiction's tax and financial systems allowed unrestrained scope for corporate tax abuse. However, Anguilla had a Global Scale Weight of just 0.000017 per cent, meaning Anguilla hosted a very small fraction of the foreign direct investment moving around the world. When Anguilla’s Haven Score and Global Scale Weight were combined, Anguilla ranked 39th on the Corporate Tax Haven Index. Although Anguilla’s tax and financial system were extremely harmful on paper, in practice the jurisdiction was not heavily used by multinational corporations and so was responsible for 0.0058 per cent of the global corporate tax abuse risks measured by the index.

In comparison, the Netherlands, which is automatically excluded from the EU blacklist because it is an EU member, received a Have Score of 80 on the Corporate Tax Haven Index 2021. A Haven Score of 80 is still very high, but lower than Anguilla’s score of 100. The Netherlands, however, had a Global Scale Weight of 11 per cent. Meaning, the Netherlands hosted 647,058 times more foreign direct investments than Anguilla. Haven Score and Global Scale Weight combined, the Netherlands ranked 4th on the index and was responsible for 5.5 per cent of the global corporate tax abuse risks measured by the index. The Netherland’s tax and financial systems may have been less harmful than Anguilla’s on paper, but in practice the Netherland’s is far more heavily used by multinationals corporations to abuse corporate tax.

How Haven Score and Global Scale Weight are combined

Jurisdiction’s Haven Score (HS) and Global Scale Weight (GSW) are combined to determine the jurisdiction's CTHI value (Corporate Tax Haven Index value), on which jurisdictions are ranked by the Corporate Tax Haven Index.

This is done based on the following formula:

In the choice of how to combine haven scores with global scale weights we are led by the Corporate Tax Haven Index’s core objective to measure a jurisdiction’s contribution to the global problem of corporate tax havens while highlighting harmful regulations of tax havens. By doing so, the Corporate Tax Haven Index contributes to and encourages research by collecting data and providing an analytical framework to show how jurisdictions facilitate profit shifting, tax avoidance and tax evasion. Second, it focuses policy debates among media and public interest groups by encouraging and monitoring policy change globally towards greater fairness in corporate taxation.

Disagreements with data or scoring

We believe we have applied our methodology consistently and transparently, disclosing the underlying, fully referenced and cross-checked data. Nonetheless, given the complexity and sensitivity of the work, we accept that disputes may arise.

We are committed to addressing any issues, and warmly welcome engagement. If you believe that our data, or our scoring, contains errors, please contact us. The clearer and more detailed an explanation you are able to provide, the more easily we can consider the issue and respond accordingly.

Download full methodology

To download the full, detailed methodology click here.