Earning Strategies used by Tax-Free Countries.
                     Earning Strategies used by Tax-Free Countries
TAX-HAVENS
The broken tax system in many countries has forced wealthy 
individuals, their families and companies to make use of offshore 
financial centers to significantly minimize, and even eliminate, 
their total income and capital gains tax liabilities. These centers 
are commonly referred to as tax havens because they are often 
low tax jurisdictions that have strict bank and corporate secrecy 
laws.
Source: Google Images
TAX-FREE COUNTRIES
The Cayman Islands, the British Virgin Islands, Panama, Nevis and 
Bermuda are some of the most popular tax havens. As a result of 
their relatively minimal income tax revenue, haven governments 
raise enough money to pay for things like healthcare, education 
and law enforcement.
Source: Google Images
CUSTOMS AND 
IMPORT DUTIES
Tax havens are not completely tax-free. Low-income tax 
jurisdictions normally supplement lost government revenues 
with taxes on most goods imported into the country, known 
as customs and import duties. These are a form of indirect 
taxes and can make the cost of living high because they are 
applied to the price of items before being sold locally.
Source: Google Images
CORPORATE FEES
There are a lot of companies that find the legal and business 
environment in tax havens to be very attractive. A research paper 
published by the International Monetary Fund (IMF) revealed that 
there were more than 600,000 offshore companies registered in the 
British Virgin Islands alone. There were more than 100,000 
companies domiciled in the Cayman Islands, that’s roughly two 
companies for every resident on the island.
Source: Google Images
REGISTRATION FEES
Although most offshore financial centers impose no corporate 
income tax, their governments still financially benefit from having 
thousands of companies registered in their jurisdiction. That is 
because tax haven governments typically impose a registration fee 
on all newly incorporated business entities like companies and 
partnerships. 
ADDITIONAL FEES
Also, companies are required to pay a renewal fee each year to still 
be recognized as an operating company. There are also additional 
fees that are imposed on the companies depending on the type of 
business activity that they engage in. For example, banks, mutual 
funds and other companies in the financial services business 
usually need to pay for an annual license to operate in that industry
STRONG REVENUES
All of these various fees add up to create a strong source of 
recurring revenue for tax haven governments. It is estimated 
that the British Virgin Islands collects over $200 million each 
year in the form of corporate fees. Wealthy individuals prefer 
paying these fees instead of paying massive amounts of 
complicated taxes.
DEPARTURE TAXES
Quite a few tax havens have a very vibrant tourism industry, 
welcoming hundreds of thousands and even millions of 
visitors each year. This high level of tourism creates an extra 
revenue source for some of these countries in the form of 
departure taxes. A departure tax is essentially a fee that is 
levied on a person upon their exit of a country.
Source: Google Images
THE BOTTOM LINE
Tax havens, that impose very low-income taxes on their citizens and 
domiciled companies. Some of the ways that their governments make 
up for the loss of potential income tax revenue include collecting 
annual license fees from incorporated entities and levying a customs 
duty on the majority of imports brought into the country.