Bahamas Tax Haven News
A tax haven is a jurisdiction that has a low rate of tax or does not levy a tax as well as offers some degree of secrecy. Definitions vary; some definitions focus purely on tax: for example, one widely cited academic paper describes a tax haven as a jurisdiction where particular taxes, such as an inheritance tax or income tax, are levied at a low rate or not at all. However other definitions refer to a state, country, or territory which maintains a system of financial secrecy, which enables foreign individuals to hide assets or income to avoid or reduce taxes in their home jurisdiction. “Secrecy jurisdiction” is sometimes used as an alternative to “tax haven” to emphasise the secrecy element, and a Financial Secrecy Index ranks jurisdictions according to their size and secrecy.
Earnings from income generated from real estate (i.e. by renting property owned in an offshore jurisdiction) can also be eliminated in this way. If taxes (if any) are paid in the tax haven jurisdiction, companies can avoid taxes in their home jurisdiction because the tax had already been paid in the lower tax rate jurisdiction. Some taxes (such as inheritance tax on the real estate, VAT on the initial purchase price of the real estate, or transfer tax, annual immovable property taxes, and municipal real estate taxes) cannot be avoided or reduced, as these are levied by the country the real estate where the property is located, and hence need to be paid just the same as any other resident of that country. The only thing that can be done is picking a country that has the smallest rates on these taxes (or even no such taxes at all) before buying any real estate.
Individuals or corporate entities may establish shell subsidiaries or move themselves to areas with reduced or no taxation levels relative to typical international taxation. This creates a situation of tax competition among jurisdictions. Different jurisdictions may be havens for different types of taxes, and for different categories of people or companies. Sovereign jurisdictions or self-governing territories under international law have the power to enact tax laws affecting their territories, unless limited by previous international treaties.
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