Over the last few years, in countries such as Australia, the United Kingdom or Spain, people with above-average incomes have complained of being overwhelmed due to the high fiscal pressure. This has resulted in many people with high purchasing power all over the world decide to send their assets to financial centers with minimal tax obligations and, in passing, that uphold strict bank secrecy measures. The Cayman Islands, the British Virgin Islands, Panama or Bermuda are just some of the most popular. However, many wonder how the governments of these countries can reduce their deficit and get financing if they just collect taxes.
Alternatives to Personal Income Tax and Corporate Income tax
Below we offer a number of alternatives to the Income Tax on Individuals or Corporate Tax that these countries apply.
Tax Customs and Import
Despite what may seem to some tax havens are not entirely exempt from taxes. One of them is the levied on imports of most of the goods that arrive to the country. It is a series of indirect taxes, which may raise the standard of living of the inhabitants because that will affect the final price of the articles to be distributed among local consumers.
Mercantile Registry and renewal fees
As we have already mentioned, there are a large number of companies that are attracted by the tax regimes of these countries. For example, a research paper by the International Monetary Fund (IMF) concluded that in the British Virgin Islands there were over 600,000 offshore companies registered and the British newspaper The Guardian discovered that the Cayman Islands housed 100,000 companies or what is the same two companies for each inhabitant.
Although these offshore centers do not impose corporation tax their governments still benefit from having thousands of companies registered in their jurisdictions. To do this, impose a registration fee to all the new entities that are created. In addition, they are obliged to pay a renewal fee each year to certify that they are still operational.
We must not forget the additional costs that are imposed to companies depending on the type of work they do. For example, banks, investment funds and other financial sector companies have to pay an annual license to operate in this industry. With all these rates it is estimated that Britancias Virgin Islands raises every year nearly 200 million euros.
A number of tax havens have a very strong tourist industry. They host hundreds of thousands or millions of visitors each year. This is used by governments as a source of extra income. Is usually included in the airline tickets or other means of transport. It is the rate that applies to those persons leaving the country.