Switzerland, Hong Kong & Luxemberg are Top Tax Havens

Posted on November 11, 2022

Switzerland, Hong Kong & Luxemberg are Top Tax Havens

It is an open secret that taxpayers from all around the world use tax havens to evade taxes in their own countries. Tax Justice Network (TJN) a nonprofit organization that researches the harmfull effects of tax evasion, has ranked top tax havens according to their secrecy and the scale of their tax activity. Rigid commitment to secrecy of financial transactions is the hallmark of tax havens.

International Business Times shares the details of the report by TJN: “This year’s index placed Switzerland, Luxembourg and Hong Kong in the top three, but with an interesting twist: if all British overseas territories included on the list, like the Cayman Islands (No. 4) or Bermuda (No. 14), were factored in together, the U.K. would be at the top. Within Latin America, Panama (No. 11), Brazil (No. 29) and Uruguay (No. 30) led the field.”

They elaborate to explain that, “the index takes into account both the transparency and the weight of individual actions into the global flux of funds. TJN states that the index could be useful for the G-20 agenda and expand the vision of public opinion over the role played by key countries, like the U.K., Switzerland or Luxembourg, in the illicit flux of funds. The fact that these nations have made it to the top of the index highlights the breach that exists between the G-20’s rhetoric and reality.”

Tax Justice Network’s report also shows that developing countries are the most hurt by tax evasion because this kind of fraud hurts the country as a whole. “Brazil, for example, accumulated more than $500 billion of nondeclared assets between 1970 and 2010. In the same period, Mexico accumulated $417 billion, Venezuela $405 billion, and Argentina, $399 billion.”

“According to TJN, in the region’s ranking only East Asia (including China, South Korea and Russia), with $2,900 billion, surpassed Latin America, which jointly accumulated $2,000 billion of nondeclared assets. These include property, real estate, boats, racing horses, gold and other goods.”

Jorge Gaggero, a TJN expert in Buenos Aires, said, “There are various reasons behind secrecy, including corruption…Mexico and Venezuela have a lot of nondeclared assets, just like most oil exporters. Oil is a business with high levels of corruption. In Mexico, the tight relationship with the U.S. inspires evasion. Brazil, on the other hand, has structural problems, like inflation, that inspires investors to keep assets overseas.”

The U.S., looking to save billions of revenue lost due to tax evasion, has targeted tax havens, including Switzerland. The IRS through the Foreign Account Tax Compliance Act (FATCA) has made deals with various countries used for evading taxes to create greater transparency in their operations with U.S. taxpayers. It is expected to reduce tax evasion substantially.