Type of activity as a factor in the process of tax haven selection

Abstract

Economic success of tax havens derives from their established policies. Countries or territories, known as tax havens are eager to gain economic success as well as their competitor countries or territories that are not considered tax havens. Strong competition exists among them and globalization has participated its share increasing the world-wide competition among countries. On one hand, some countries compete on basis of knowledge, others on basis of high level of social security , cheap labor, economies of scale, geographic position etc.. On the other hand, tax havens compete with preferable and more flexible tax legislations. Numerous tax havens have developed worldwide and there is an increasing number of corporations searching for a territory with optimal conditions to carry out their activities. Individual tax havens have, in majority, developed competitive advantages for specific activities. Consequently, some of them have become more suitable for banking, other for insurance services, establishment of holding companies, investment funds or other activities. The purpose of the article is to support the initial assumption that different tax havens are more supportive for development of some activities than others.