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  • Writer's pictureBrandon Guillermo Lopez Moreno

Let's talk about tax havens...

Let's imagine the combination of these two words: "Paradise - Ideal place for a certain group of people, flora or fauna; usually related to luxurious beach destinations" and "Fiscal - Tax system, related to laws, taxes and money". Which, in theory are only two words, but together could imply obtaining great benefits, but could also be quite deceiving, because of the risks involved in this type of practices.

Now, in reality, what are tax havens? It could be mentioned that they are those territories where the tax regimes are very attractive both for the citizens who are part of these places, as well as for all kinds of foreign companies, which register their tax residence there, with the aim of enjoying the benefits that they could not obtain in their countries of origin.

Basically, these havens are characterized by offering investors, whether individuals or companies, little to no tax burden and -to a certain level- in politically and economically stable environments. Therefore, investors are encouraged to deposit in local banks in these places with offers of great benefits in tax burdens, where even a minimal or a non-tax burden is promised. This is very attractive for those who want to avoid tax obligations in their own countries.

Basically, it works when a company decides to create a bank account in one of these "havens" to deposit all the profits generated in its company and that operates in some other place where these benefits do not exist, so in the case of our country, it is not necessary to report to the Ministry of Finance and Public Credit, but if the tax authority wanted to investigate this company, it would necessarily have to request information from the respective authorities of the place considered as "tax haven" since the main characteristic of these is the protection of the identity, as well as the information of such companies.

Mainly, this is caused when all these movements made by the companies are for the purpose of not declaring and taking tax benefits, and that is considered as an illegal operation, but it is important to mention that it is possible to have a legal operation in a place of residence considered as a "tax haven", when the operations of this company are reported to the authorities.

In Mexico, penalties for those who incur in tax evasion through "tax havens" can range from the payment of pending taxes, with their due attachments, to fines of 75% of the overdue taxes.

In this sense, a tool that has been very useful for the authorities in their tasks of auditing this type of structures has undoubtedly been the exchange of information with other governments, which to a large extent has led many taxpayers to reconsider their strategies and regularize their tax payments in Mexico.

As mentioned, it will not necessarily be considered an illegal operation if a company wishes to open a bank account in any of these territories, for which it is necessary to comply with the regulations required by the authorities for such activity to be considered a legal activity.

Another element to highlight is the importance of information exchange in this type of transactions, which has led the authorities to detect various illicit operations or, if applicable, to continue increasing the list of tax havens, which between governments should have a close communication and collaboration in this type of matters.

In conclusion, it could be said that tax havens are born out of the need of the companies to pay excessive tax burdens, without considering the economic effects they may have in their countries of origin, since the main characteristic of these territories is that they simply lack mechanisms to make information transparent.

Finally, it is important to point out that legal operations can be carried out within the territories known as tax havens, as long as they comply with the regulations required by the authorities.


Published on December 8nd, 2021.

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