Tax Haven : What is a Tax Haven and Why Flipkart deal happen in Singapore

Published on 29 Nov 2019 / In Company Incorporation

Tax Haven: What is a Tax Haven and Why Flipkart deal happen in Singapore ?

• Tax Haven:

A country or independent area where taxes are levied at a low rate.

A Tax Haven or offshore financial center is any country or jurisdiction that offers minimal tax liability to foreign individuals and businesses.

Tax Havens do not require businesses to operate out of their country or the individuals to reside in their country to receive tax benefits.

• Benefits to a Tax Haven

1 To Tax Haven Countries – The countries benefit by way of attracting capital to their banks and financial institutions, which can then be used to build a thriving financial sector.

2 To Individuals or Businesses – The individuals and businesses benefit by saving tax, which in tax haven countries may range from zero to low single digits compared to high taxes in their country of citizenship or domicile.

• Top Tax Havens in the World

1. Bermuda :
2. Netherlands
3. Luxembourg
4. Cayman Islands
5. Singapore
6. The Channel Islands
7. Isle of Man
8. Mauritius
9. Switzerland
10. Ireland

Top Companies that Benefit from Tax Havens

1. Apple – Amount booked offshore is $214.9 billion. It uses Ireland as a tax haven. Would have owed the U.S. government $65.4 billion in taxes if tax haven benefits were not used.

2. Nike – It holds $10.7 billion offshore. It uses Bermuda as a tax haven. It would have paid $3.6 billion for taxes if tax havens benefits were not used. This implies Nike pays a mere 1.4% tax rate to foreign governments on those offshore profits, indicating that nearly all of the money is officially held by subsidiaries in tax havens.

3. Goldman Sachs – It holds $28.6 billion offshore and uses Bermuda as a tax haven.

4. Walmart

• Indian companies registered in Singapore

Several Indian startups, although operating in India, have registered holding companies in Singapore to benefit from increased funding opportunities, business and tax friendly environment, and stable economic policies.

One of these companies is Flipkart, an e-commerce company that is registered in Singapore as Flipkart Private Limited (FPL).

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