FINANCIAL FUNDIS
To put everything in context, Statistics SA
estimated South Africa’s population at 54
million people in mid-2014, meaning
less than 10 percent of the population
pay tax. This places a heavy burden on
higher income earners, as South Africa
uses a progressive tax system where the
more you earn, the more you get taxed.
But what if you don’t want to pay tax? For
high-income individuals, especially the
exorbitantly wealthy, there is hope. All
they have to do is find and utilize those
places known only as‘tax havens’.
The Organisation of Economic Cooperation and Development (OECD)has
set four key factors to identify tax havens:
1. No or nominal tax on relevant income
2.Lack of effective exchange of information
between countries
3. Lack of transparency
4. No substantial activities
As of 2014, the OECD’s Global Forum
on Transparency and Exchange of
Information for Tax Purposes classified
four jurisdictions as being non-compliant
- the worst possible rating (or the best if
you are intent on stashing your money
away). These areas have been identified
as the British Virgin Islands, Cyprus,
Luxembourg and the Seychelles with
nine other countries classified as partially
compliant - those being: Andorra,
Anguilla, Antigua and Barbuda, Austria,
Barbados, Indonesia, Israel, Saint Lucia,
and Turkey.
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Switzerland, in pop culture is perhaps
the most famous of places where the
rich go to hide their booty, is currently
under review - as are others such as
Marshall Islands, Dominica, Guatemala,
Lebanon, Liberia, Panama, Nauru, and
Trinidad and Tobago.
The implications of tax evasion are
serious, especially for the state. In May
2013, Oxfam estimated that US $18.5
trillion was hidden away by wealthy
people in tax havens worldwide,
representing a loss of more than US
$156 billion in tax revenue. According
to Oxfam, two-thirds of that amount,
over US $12 trillion, was hidden in
European Union related tax havens.
That figure does not include companies
who would register an affiliate in a tax
haven as a means of pipelining profits
away from tax authorities.
Beyond the Global Forums efforts,
another important player in the crack
down on tax havens is the United States,
made evident through their passing