Corporate haven

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

History

Corporate Havens are a post 1970s^{[citation needed]} global economic phenomenon. 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.

Geographical distribution

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.

Commonwealth & Western Europe

Corporate havens outside the United States include British Overseas Territories such as

• Bermuda (according to the Foot report^[1] Bermuda is the third largest reinsurance centre in the world and the second largest captive insurance domicile)
• British Virgin Islands (the leading corporate domicile in the world, with nearly 500,000 active registered companies)
• Cayman Islands (the leading jurisdiction for hedge funds)
• Gibraltar (for financial services, and incorporation)

and the British Crown Dependencies:

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

Other havens include

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

Increasingly, multinational corporations are using the leading corporate 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.

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 worldwide income, unlike the citizens of many other nations.

• 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.

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

• The US, for many Canadians is used as a tax haven.
• Canada has no taxes on Lottery winnings or any Estate Transfer taxes. These would typically be taxed in most European Tax Havens.

See also

• Corporate Inversion
• Internal affairs doctrine
• Offshore financial centre
• Tax haven
• Tax treaty
• Tax exporting

Notes

1. ^ "Michael Foot publishes final report". HM Treasury. 2009-10-29. http://www.hm-treasury.gov.uk/press_98_09.htm. Retrieved 2011-03-31. 

External links

• International Financial Centres Forum (IFC Forum)
• Offshore Banking and Financial Centers