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Canadian System Of Tax HavensBy Expert Author: Ken Donaldson
International corporations have for long been in search of methods or to be more precise, tricks, to evade taxation of countless types, across their global market destinations and that's where the tax implementation teams found their use, curbing the practice of tax evasion, on both corporate and individual scale but, one such practice seems to be defying every possible effort of these taxation departments, especially that of the US, of putting an end to the "not so illegal" practice of tax avoidance. Tax haven -a term that still remains largely undefined, has in a way provided a major outlet to individuals and corporate setups in saving huge capital which otherwise would have been taken as tax to the state.
The countries that provide basic modifiable tax structure which is composite in it and relies on the administration's alteration, with time which has been used to favour huge as well as middle class businesses in terms of tax reductions as compared to their home state. This is what attracts these huge corporate establishments to setup industries in these states i.e. to enjoy tax benefits, which when was calculated led to a staggering range of $10 billion to $90 billion of revenue losses to the taxation departments. To add to these excerpts of tax avoidance, the individuals too have started using these tax havens in their favour by purchasing foreign investments or by simply not reporting their income which they are free to save in foreign banks that do not give out any details of the client. Another method involves shell corporations and trusts that are exempted under the US tax laws from taxing interest income and capital gains, including investments within the US.
Real Estate Taxation in multiple countries have yet not faced a threat as the taxation department faces due to tax havens, but given the nature of real estate tax being imposed in various countries, the probability of tax evasion in this sector cannot be ruled out. Most of the countries, especially the western part of the world favours a flexible structure of tax amount estimation, that takes into account the current land value of the holding, which as compared to other countries like India, Denmark etc has a better relevance in present day because the stringent and rigid set of rules being followed by the former countries while evaluating tax results in people resorting to non-investment methods, especially in real estate which is at present in a booming stage and if not regulated well, will outgrow the administration by finding loopholes in the system.
For the rapid revenue losses, inflicted by none other than their own corporate industries, President Obama had presented International Tax Proposals that included restricted access to foreign tax credits, control over check-the-box practice and many more. With multiple proposals on regulation of this 'undefined' practice, the Obama administration aims to raise $210 billion for fiscal year 2010-2019, another $129 billion for fiscal year 2012-2021 and yet another $148 billion for the fiscal year 2013-2022.
Ken Donaldson is a chartered accountant who practices as an independent tax consultant. He also author of tax havens, in this article he provides real estate taxation tips. For more information you can visit Taxca.com.
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