TAX HEAVENS: THEORETICAL GUIDELINES

Abstract

The main purpose of this paper is to study the concept and aspects of tax havens and the attempt of companies with significant revenues to avoid taxation, their causes, trends and effects in the European Union (EU) resulting from tax avoidance or tax evasion behavior. These phenomena were triggered by several factors. The purpose of this study is to identify the major determinants of tax havens in the current economic context. In recent years, the international and European tax policy debate has focused on tax avoidance strategies. Attempts and cases of tax evasion have become more frequent. The development of tax havens has been favored by some macroeconomic factors, but also by the tax noncompliance behavior of companies and individuals looking for different ways to avoid taxation. We examine the theoretical implications of tax haven operations on the actual tax burdens of companies based in Europe. One of the factors that has a major contribution to the development of the orientation trend of multinational and national companies with significant revenues made on the territory of the EU is the degree of taxation. Although this level of taxation differs from one country to another, it is a significant one and is the main pillar on which tax havens are based. This expansion of the phenomenon of avoiding taxation by transferring income to tax havens generates negative effects in the European economy, which leave their imprint on the economy more and more. Since the phenomenon of tax avoidance by directing companies to tax havens cannot be eradicated, it is very important to find measures to limit it. In this context, at the level of the European Union, concerns have arisen for the development of a conceptual, institutional and legislative framework to mitigate these phenomena as much as possible. This phenomenon occurs both within the European Union and globally. The European Union together with the Member States must work more and collaborate internationally to limit the orientation of companies towards tax avoidance by transferring profits to tax havens. In the general context of the globalization of the world economy, the governments of countries that want to increase their tax revenues hit a significant obstacle called "tax havens". The main finding of this approach is that the EU together with other OECD member states are making diplomatic and legislative efforts to limit as much as possible the tendency to avoid taxation.

Keywords

• tax heavens
• tax avoidance
• offshore
• jurisdictions black list
• tax fraud