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LSDefine
Simple English definitions for legal terms
tax haven
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A quick definition of tax haven:
A tax haven is a place, usually a country, where people or businesses can keep their money and pay very little or no taxes on it. This means they can save a lot of money on taxes. Tax havens are not always easy to spot because it's not just about having low taxes. It's also about having special rules that allow people to move their money to a low-tax place even if they don't have any connection to that place.
A more thorough explanation:
A tax haven is a place, usually a country, that has very low or no taxes on the profits made from business transactions or by people who live there.
For example, a company might set up a subsidiary in a tax haven country to avoid paying high taxes in their home country. This allows them to keep more of their profits. Another example is a wealthy individual who moves to a tax haven country to avoid paying high taxes on their income and assets.
What makes a place a tax haven is not just the low tax rate, but also the way it interacts with other tax systems. This allows people and companies to move their money to a low-tax environment, even if they have little connection to that place.
Overall, tax havens can be seen as a way for people and companies to legally avoid paying high taxes in their home country, which can have a significant impact on the global economy.