In recent years, provinces or countries that impose little or no taxes have become tax havens, but there are no specific and formal criteria for classifying countries as such.

The Spanish magazine "Muy Negocios & Economía" says in a report that many countries have doubts and questions about whether they can be accused of being a tax haven, and among these countries: Switzerland, Panama, Ireland, Andorra and Malta.

The magazine explains that the answer varies from person to person, because there is no official regulation or document that contains the criteria adopted in this classification.

It is up to each country, entity or organization - such as the European Union, for example - to decide whether that country has crossed the red lines in tax laws and procedures, and has become a haven for smugglers.

Today, the European Union is updating its laws and regulations for classified countries, as 12 countries or territories are tax havens - none of which are located within the old continent - including the United Arab Emirates.

In Spain, for example, a royal decree was issued in 1991, which includes 48 countries and territories classified as tax havens, but this list is constantly updated, and the number has decreased to 33.

What is a tax haven?

The magazine explains that the country or province where taxes are too low or abolished entirely is called this description.

In addition, it is common for businessmen and wealthy men who work in these countries to obtain guarantees that their identities and activities are hidden in the context of preserving their banking, commercial and professional dealings.

In these regions of the world there are overseas companies, which are those that were established in specific regions, and are owned by foreigners who use them to defraud and evade the taxes imposed on them by the ministries of finance in their countries of origin.

The magazine adds that the haven - or tax paradise - may be a country, a province or a region, characterized by small area and limited natural resources, but characterized by the strength of the banking sector.

Protect secrets

According to a report published recently by the European Chamber of Commerce, the countries of the European Union are prevented annually from entering 800 thousand million euros, because of these tax havens.

Of course, the governments of these sanctuaries are trying to evade the signing of any formal agreements or agreements to exchange information, especially the data of companies and individuals who live on their land, and they are keen to maintain the confusion of these secrets, and to maintain confidentiality and keep them anonymous to encourage them to bring their money to them.

The magazine stresses that these tax havens ask few questions, and do not ask for answers. In fact, one of the conditions imposed for these countries and provinces to leave the black list of tax evasion is to sign an agreement to exchange information, which allows to know who is hiding their money in their banks.

Why are these havens a problem?

Officials in these havens confirm that what they are doing is legal and does not constitute any violation, as they are only allowed to allow investors to store their money without paying little taxes. But the main problem with this practice is that, unlike what happens in the rest of the world, these havens do not ask about the legitimacy of the source of the funds, how long they are deposited in the banks, and the activities in which they are used.

To clarify this problem, the magazine notes that in Spain, for example, when entering a bank branch carrying a bag of 6 thousand euros, the service employee will ask you about its source. Also, the supervisory and judicial bodies in Europe, for example, if you ask this bank to provide them with data of a customer and his financial situation, they will disclose these data immediately and cooperate with the authorities, something that does not happen in tax havens.

Thus, these practices that occur in small and remote countries and provinces, although they are legal in theory, allow money to be illegally obtained and deposited there without any problems, and these funds deposited in sanctuaries enable their owners to avoid paying taxes in their countries In which they live.

In addition, these havens have very few lenient tax laws. The great benefit that their governments derive from this fiscal policy is that they take a huge commission in exchange for helping these wealthy people transfer their money.

Transfer money in Latin America

On the entire American continent, Puerto Rico is the largest beneficiary of this abnormal transfer of funds abroad.

According to missingprofits.world, a joint project between the universities of California, Berkeley and Copenhagen, to analyze tax status in 21 American countries; This island located in the Caribbean view attract the largest amount of smuggled profits from other countries, and its value in 2017 amounted to more than 38 billion dollars.

As for the Cayman Islands, it came in second place, as it succeeded in attracting more than 32 billion dollars in money smuggled abroad, while Panama got 18.1 billion dollars.

The magazine indicates that the precise definition of the term tax haven is still a matter of controversy and disagreement between governmental organizations and institutions, but these countries and provinces that are included in this classification are those that impose low or totally non-taxes, and thus attract the wealthy non-spontaneously.

This advantage is detrimental to the economies of the more productive countries, because the companies that are active in it are diverting their income towards these havens in order to avoid paying taxes on them.