History of tax havens
- This paper examines the historical development of tax havens. The case for regulating tax havens has become an increasingly prominent issue for policy makers worldwide, especially in light of the current financial crisis.
- Modern tax havens can be organized into three groups: UK-based or British Empire- based tax havens, European havens, and thirdly new tax havens from the transitional economies in South America and Africa.
- Tax haven strategy developed piece by piece in different locations, often for reasons which had little to do with their ultimate use. Tax havens are a distinctly modern phenomenon, whose origins lie at the earliest in the late nineteenth century. Only during the second phase of their development, from the end of the First World War, did countries begin to develop comprehensive policies to become a tax haven.
- Since then, tax havens can be viewed as a distinct developmental state strategy that could have evolved only in the context of a robust international system of statehood, respectful of the sovereign right of states to write their own laws and within an integrated world market.
- Statistics suggest that tax havens have an extremely prominent role in the global financial system. They have become an important instrument of tax evasion worldwide and constitute the single largest drain on developing countries' economies.
- Today, the key issue regarding tax havens is their lack of transparency. Tax havens need to be regulated by an internationally agreed code of conduct that ensures the transparency of ownership and traceability of assets to their ultimate owners.