A corporate haven is a jurisdiction with laws friendly to corporations thereby encouraging them to choose that jurisdiction as a legal domicile.
Contents
History
Corporate Havens are a post 1970s global economic phenomenon. This decade more or less marked the end of colonialism and the formation of EU in the form of the EEC. Many legal and taxation processes culminated in this decade that led to the formation of Tax Havens and Corporate Havens throughout the developed world.
North America
Within the United States, Delaware is considered the pre-eminent corporate haven for both domestic and foreign large public corporations, while Nevada, Wyoming, Alaska, Puerto Rico, and the U.S. Virgin Islands are corporate havens for small closed corporations.
Delaware, through its developed legal system and laws protecting shareholder rights, is geared toward the large complex public corporation, whereas Nevada and Wyoming are more attractive to the small privately held corporation. Delaware law tends to protect the rights of boards of directors and shareholders, while Nevada and Wyoming tend to favor management. In the U.S. Virgin Islands, aside from the fact that there are no property and import taxes in the territory, it has been successful in luring small businesses in investing in the economy with generous tax breaks. Companies receiving a 90% tax and a personal income tax cut. Puerto Rico recently opened up as a corporate tax haven for American citizens. Non-Puerto Rican citizens who move to Puerto Rico from anywhere else in the U.S. will receive automatic tax incenitives and a 100 percent tax break. The same incentives are offered to small corporations that are not Puerto Rican, but move their office(s) there.
Commonwealth and Western Europe
Corporate havens outside the United States include British Overseas Territories such as
and the British Crown Dependencies:
Other havens include
Increasingly, multinational corporations are using the leading corporate havens, either by incorporating subsidiary corporations in these locations or by moving their corporate domicile (the home company of the corporation) there.
Corporate havens are often not beneficial to small corporations operating in one legal jurisdiction because of the complexity of creating a corporation elsewhere and then having to re-register in the local area as a foreign corporation.
North American legal issues
United States tax law (since the 1980s) has made these offshore corporate havens very unattractive to individual citizens. US citizens are statutorily taxed by the U.S. government on their worldwide income, unlike the citizens of many other nations.
The Canada Revenue Agency loses billions each year to the Tax Haven phenomena.