Blog 2: Learning more about "Tax haven" and Countries with high rate of tax evasion

What is Tax haven?

A tax haven is a jurisdiction where particular taxes, such as an inheritance tax or income tax, are levied at a low rate or not at all. It may also 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 the home jurisdiction.

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.

[News]US, Not Panama, in Top 10 Tax Havens for Evaders

The United States is among the top 10 countries with the least financial transparency, making it a perfect tax haven for those unsavory characters looking to launder and hide their ill-gotten cash.

The recent huge leak of documents from the Panamanian law firm Mossack Fonseca has revealed how tax havens are used to hide wealth and has focused the world's attention on the Central American nation. 

Important: Can you afford to Retire? The top 10 nations for financial secrecy according to The Tax Justice Network:

   Switzerland

    Hong Kong

    USA

    Singapore

    The Cayman Islands

    Luxembourg

    Lebanon

    Germany

    Bahrain

    United Arab Emirates

Read more: BBC: US, Not Panama, a Top 10 Tax Haven 

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.^[3] 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.

[Video] Tax Havens 101: the High Cost of Going Offshore

What are offshore tax havens? 

Who uses them? 

How do they work? 

Let's find out in this video!

Blog 1: Introduction To Tax Evasion, The difference between "Tax evasion" and "Tax avoidance"

Tax evasion is the illegal evasion of taxes by individuals, corporations, and trusts. Tax evasion often includes taxpayers deliberately misrepresenting the true state of their affairs to the tax authorities to reduce their tax liability and includes dishonest tax reporting, such as declaring less income, profits or gains than the amounts actually earned, or overstating deductions.

Tax evasion applies to both the illegal nonpayment as well as the illegal underpayment of taxes. Even if a taxpayer fails to submit appropriate tax forms, the International Revenue Service (IRS) can still determine if taxes were owed based on the information required to be sent in by third parties, such as W-2 information from a person’s employer or 1099s. Generally, a person is not considered to be guilty of tax evasion unless the failure to pay is deemed intentional.

Tax evasion does not equal to tax avoidance. Tax avoidance is the use of legal means to modify an individual's financial situation in order to lower the amount of income tax owed. This can include efforts such as charitable giving to an approved entity or the investment of income into tax deferred mechanism, such as an individual retirement account (IRA). In the case of an IRA, taxes on the invested funds are not paid until the funds, and any applicable interest payments, have been withdrawn.

Comparison of tax avoidance and tax evasion
From http://www.qwealthreport.com/tax-avoidance-is-not-tax-evasion-but-try-telling-politicians/