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Tax Havens - An Insidious Mechanism for Evading Tax Obligations

Author

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  • Narciz Balasoiu

    (Academy of Economic Studies, Faculty of International Business, Bucharest, Romania)

Abstract

The development of world trade along with accelerated globalization has an effect not only on economic development or the strengthening of international cooperation, but also facilitated sophisticated mechanisms by which the payment of tax obligations by multinational companies is circumvented. Transfer pricing and tax havens, considered both individual and combined practices, negatively affect a country's ability to implement fiscal policy and improve budget revenue collection capacity. The problem is even greater in the case of states with a fragile economy, where the dynamics of development is vitally related to the elimination of legal, immoral or illegal tax evasion practices. The Transfer pricing mechanism has also been optimized to handle taxable transactions between companies affiliated to a particular group. Multinational companies avoid taxes by overestimating imports and underestimating exports, thus managing to distribute revenues in various regions of the globe that have great tax advantages.

Suggested Citation

  • Narciz Balasoiu, 2021. "Tax Havens - An Insidious Mechanism for Evading Tax Obligations," RAIS Conference Proceedings 2021 0049, Research Association for Interdisciplinary Studies.
    • Handle: RePEc:smo:lpaper:0049
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    References listed on IDEAS

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    1. Alfons J. Weichenrieder & Fangying Xu, 2019. "Are tax havens good? Implications of the crackdown on secrecy," Journal of Economics, Springer, vol. 127(2), pages 147-160, July.
    2. James Nebus, 2019. "Will tax reforms alone solve the tax avoidance and tax haven problems?," Journal of International Business Policy, Palgrave Macmillan, vol. 2(3), pages 258-271, September.
    3. Alex Cobham & Petr Janský, 2018. "Global distribution of revenue loss from corporate tax avoidance: re†estimation and country results," Journal of International Development, John Wiley & Sons, Ltd., vol. 30(2), pages 206-232, March.
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    Cited by:

    1. Adriana AnaMaria Davidescu & Eduard Mihai Manta & Adina Teodora Stoica-Ungureanu & Magdalena Anton (Musat), 2022. "Could Religiosity and Religion Influence the Tax Morale of Individuals? An Empirical Analysis Based on Variable Selection Methods," Mathematics, MDPI, vol. 10(23), pages 1-32, November.

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    More about this item

    Keywords

    tax havens; profit shifting; tax evasion; corporation; fiscal legislation;
    All these keywords.

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