Tax Havens Benefit Global Economy

June 26, 2013 Tax Havens

A Paradise of the tropics.LONDON – Tax havens have received an unfairly bad rap in recent times, according to new research which points to their benefits.

Late last week the UK based think tank the Institute of Economic Affairs released a new report claiming that tax haven jurisdictions help facilitate international business and aid in maintaining healthy economies.

According to the Institute, countries with high tax rate are able to attract more mobile capital if investors are able to lower their tax obligations by using a entity registered in a tax haven.

If tax havens did not exist, high tax country would be left in a position of not being able to attract any capital from overseas, and these jurisdictions would be forced to lower their own tax rates.

The author of the report Jamie Collier suggested that tax havens also benefit the entire global economy by facilitating fund management activities, especially collective investment vehicles.

Tax havens also help in the creation of financial products, which ultimately not only benefits financial markets, but retail investors and everyday individuals.

Photo by Joe Dsilva