Where the cash is stashed

Posted By Aditya Dasgupta Tuesday, August 22, 2006 - 12:54 PM Share

According to a recent U.S.Congressional investigation, for every dollar paid by honest American taxpayers, seven cents is stashed away by big companies and wealthy individuals in offshore tax havens. There's an estimated $11.5 trillion parked in tax havens worldwide, with much of it coming from money launderers, criminals, and elites in the impoverished developing world. But the 70 or so tax havens worldwide may not be all bad. Harvard and Michigan economists have shown that not only do tax havens flourish, they stimulate economic growth in nearby countries as well.

Regardless of their merits, tax havens are in bad shape. In June 2000, the Organisation for Economic Co-operation and Development released a list accusing 35 jurisdictions worldwide of engaging in harmful tax practices. Since then, all but five have agreed to clean up their acts and cooperate with international authorities. After 9/11, the U.S. joined the crackdown on tax havens as part of the war on terror. And politicians everywhere are closing legal loopholes that have for years allowed companies to save billions by moving their profits offshore.

Tax havens may be on the decline, but they still hold a lot of the world's treasure. In this week's list, FP looks at six of the world's leading tax havens to find out whether their future is more stashing - or just crashing.

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