What is a tax haven?

There is no universal definition, but tax havens (tax havens), or offshore financial centers (offshore financial centre), are generally countries or places with low or zero corporate taxes that allow foreigners to easily establish businesses there.

Tax havens also often limit public disclosure about companies and their owners. Because the information can be difficult to extract, tax havens are also sometimes called secrecy jurisdictions. Ironically, tax havens almost always deny that they are tax havens.

What are the implications, apart from tax evasion, of the use of tax havens?

Since the flow of operations occurs in two directions, in addition to tax evasion we find other activities involved within the network of these havens. There is a whole legal-administrative network whose purpose is the creation of ghost companies (shell companies) and their regulation in favor of foreign clients. Additionally, there are international banks that operate directly with clients and offshore financial centers as part of a "wealth management service."

What negative effects do tax havens have on the Latin American economy?

Given the fiscal and economic nature of Latin American countries, this region is one of the most dependent on tax collection. Therefore, when companies that operate within their borders do not comply with their tax obligations, this becomes a greater burden for citizens; in worse scenarios, the situation turns into a tax deficit that leads to budget cuts.

What is the motivation of transnational companies to make use of tax havens?

Individuals and businesses benefit by saving taxes, which in tax havens can range from zero to low single digits compared to high taxes in your country of citizenship or domicile. For example, a large pharmaceutical company might establish a new entity in Bermuda or the Netherlands, and "sell" that entity a patent for a profitable drug. The parent company will then pay a license fee (for the use of the patent) to the offshore daughter company, which in turn would allow it to record lower profits in the country where it is legally incorporated and therefore pay a higher tax bill. low.

After the leak of the Panama Papers, has there been greater control over the use of tax havens?

Not really, and for one simple reason: Some of the world's most powerful countries are major players. Offshore money flows through the overseas territories of the UK; the United States and through Switzerland and the Netherlands. However, since the publication of the Panama Papers, there has been a push in the United States to eliminate corporate secrecy (that legal power to maintain the anonymity of the legal owners of shell companies in tax havens).

What mechanisms are needed in Latin America to combat the use of tax havens?

It is a situation that requires strong domestic and international legislation. On the one hand, autonomous investigative agencies are necessary to be in charge of the search and recognition of shell companies that are in operations with Mexican entities. On the other hand, strong international cooperation is required to combat such a situation. For example, the United States has issued different agreements of an international nature that allow it to be informed as soon as a citizen of its own opens an account in a foreign bank, including some of these tax havens.