The average American with an adjusted gross income of $50,000 to $75,000 pays about $5,385 in taxes, yet Apple (AAPL) - Get Report paid almost nothing in taxes on $74 billion between 2009-2012 on worldwide sales.
How do these multinational corporations do it? It involves setting up headquarters or subsidiaries in corporate tax havens, countries with attractive tax systems and favorable secrecy laws.
This list of corporate tax havens is based on an index by the Tax Justice Network, a U.K.-based independent international network focused on research, analysis and advocacy in the area of international tax and financial regulation.
The index ranks countries by their “complicity in global corporate tax havenry,” according to the Tax Justice Network. Each country’s tax system is scored based on the degree to which it enables corporate tax avoidance. Each country’s corporate tax haven score is then combined with the scale of corporate activity in the country to determine the share of global corporate activity put at risk of tax avoidance by the country.
The Tax Justice Network's aim is tax fairness, and says that these countries “have aggressively undermined the ability of governments across the world to meaningfully tax multinational corporations,” according to their website, and that an estimated $500 billion in corporate tax is dodged each year globally by multinational corporations, while the International Monetary Fund estimates it at $600 billion.
Of the top 10 tax havens — which comprise 52% of the worlds corporate tax avoidance risk — the top three are British territories (British Virgin Islands, Bermuda and Caymans) and No. 7, Jersey, is a British dependency. These four comprise nearly 25% of the total share of tax havenry of the 64 jurisdictions. Overall, according to the Tax Justice Network, the U.K. is responsible for over a third of the world’s corporate tax avoidance risk.
Based on the index, these are the 30 top corporate tax havens.
- Each country’s share of the index is indicated as a percentage, where all 64 countries add up to 100%.
- The tax haven score for each jurisdiction is constructed from 20 indicators which reflect the many different rules, laws and mechanisms that multinationals can use to escape tax. A score of 100 means the jurisdiction is a a “no-holds-barred” corporate tax haven, while a zero means there is no tax haven potential.
- The third bullet point, the global scale weight, estimates how extensively multinationals are using the jurisdiction, and is based on foreign direct investment data provided by the IMF.