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Small European countries reign as big tax havens
Is it any coincidence that some of the smallest countries in the world are also the world's best tax havens?
Beginning with Switzerland and Bermuda after World War I, little countries with stable governments and strong currencies but scant job-producing resources have gone into the offshore banking business.
The Organisation for Economic Co-operation and Development, a Paris-based research and policy group that monitors banking practices around the world, lists Andorra, Liechtenstein and Monaco as "uncooperative tax havens."
In tax havens, low -- or nonexistent -- taxes and obfuscating banking practices attract rich retirees, corporations and holders of anonymous bank accounts who avoid heavy taxation in their home countries by investing there.
Every nation has the right to set its own tax policy, resulting in variations that promote banking sector competition. But problems arise when tax havens won't share information about investors with tax officials from other countries, resulting in an estimated $100-billion-a-year tax-revenue loss in the U.S. alone.
In 2002, a tax evasion scandal hit Liechtenstein when a former employee of one of the principality's major banks sold a list of more than 1,000 investors, thought to be big-time tax evaders, to the German government, which then shared it with the U.S. The informer, now in hiding, is wanted by Interpol for theft and Liechtenstein has accused Germany of espionage.