Why do tax havens exist ?

Tax havens play a central role in globalisation : more than half of the financial flows pass through tax havens, and 85 % of hedge funds are registered in tax havens. Not only do tax havens deprive countries of considerable revenues, but they are at the heart of global financial instability. In the nineteenth century, tax havens originated in the American states of New Jersey and Delaware (the location of the headquarters of most of the important US companies), because they provided exceptional tax conditions for companies. The number of tax havens grew in the 1960s from the London financial markets when multinationals began making various governments compete against each other to optimise their fiscal situation. Following the latest economic crisis, the OECD (Organisation for economic cooperation and development), the European Union, the American government and the G20 countries decided to intervene in order to provide regulatory control. At present, most of the action taken concerns individual tax evaders although multinationals largely profit from tax evasion. The battle has only just begun…