Backup Withholding

Finance allah shmoop What is a tax haven Well it's

this kindly loving wonderful place just past the gates of

st peter you know maybe that's attacks heaven If you

tilt your telescope at just the right angle you'll see

the cayman islands of the bahamas You might see somalia

although it always seems to be storming therein And lately

you'll see ireland Yeah another tax haven Well how on

earth are all these countries linked Well they all offer

special tax incentives for corporations doing profitable business there such

that those corporations more or less pay little tax if

any Why was this even a thing Well in america

at least before trump became president there was a severe

hit against corporations who had divisions outside of the united

states selling printers or search links or purple leather handbags

for nine hundred ninety nine dollars each such that those

corporations were taxed once by the country in which they

did business Think france that was ah high tax rate

And then if those companies wanted to bring their cash

back to america to be held in an american bank

well then those companies were taxed again turning a dollar

Of profit into something like an thirty or forty cents

since it made no sense for companies to lose so

much hard earned profits so quickly to tax dollars Well

a mini industry in tax havens grew up all around

those unfair government dealings Well some of the schemes behind

these processes included something called a dutch sandwich and no

not the one with the raw hearing No in this

one the product is deemed as having been shipped by

an irish company but then booked or accounted for through

a shell or quays I fake company or holding company

in the netherlands sometimes remaining profits or then shipped to

the caymans or bermuda otherwise known as the bermuda black

hole Which leads the way for us to make a

joke here But we won't I say we do ever

strength There are three basic types of tax havens in

a dutch sandwich Primary tax havens Yeah those are the

ones with the shell corpse Then he have semi tax

havens where a country will produce goods for sale primarily

outside of their boundaries and have flexible regulations to encourage

you No job growth for themselves and third kind is

a conduit tax haven where income from sales mainly sales

made elsewhere is collected and then distributed back inside the

country Well over time the legal structure of tax havens

has shifted But in the new post obama era which

actively lowered corporate tax rates and defended american companies rights

to bring american cash back home to america While the

need for tax havens feels like it is slowly fading 00:02:43.803 --> [endTime] away But there's still more popular than tax heaven