The Concept of Tax Haven: A Legal Analysis 

February, 2004 - Mykola V. Orlov

1. Introduction With the further globalization of the world financial infrustructure accompanied by the persisting lack of international coordination in fiscal affairs? increasingly the attention of the major developed countries (in particular, such groupings as G 7 and G 10) is turned to the problems of erosion of national tax bases and international tax evasion/avoidance, as well as the role played in it be so-called tax haven. Thus, the last years of the past century witnessed the marked intensification of th international efforts directed at combating various financial and fiscal abuses that were invariably focused on the countries and territories formally and informally referred to as tax haven. This article attempts to address some of the groundwork issues related to the tax haven phenomenon. In particular, it emphasizes the following aspects of the tax haven phenomenon rarely viewed in their interaction: - historical (the tax haven is by no means a recent phenomenon and was present if different forms and to a varying extent during all stages of the historic development of national tax systems); - developmental (it appears that many countries, including some of the developed ones, have passed through the tax haven stage); - jurisdictional (one of the fair arguments might be that it is up to every individual state to decide on the system of taxation it wants to have and any interference with it should be contrary to the principles of public international trade in goods and services); and - economic (since every tax system is firmly rooted in the particular economic system of each individual country, arguably there exist economic conditions when a tax haven type system of taxation is fully justifiable from the economic point of view).



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