What is Tax Neutrality?
Tax Neutrality is not about darkness or financial secrets. It’s not the same as tax avoidance, and Tax Neutral jurisdictions are not tax havens. Tax Neutrality is about high standards, transparency, empowerment, security, efficiency, simplicity, and fairness.
A Tax Neutral jurisdiction does not add an extra layer of tax on top of what investors and companies owe in their own jurisdictions in compliance with their domestic tax rules. Tax Neutral jurisdictions can be countries or states. They are similar to countries with tax treaties, but have less complexity and provide equal tax treatment to all countries.
Investors can securely and transparently pool capital in Tax Neutral jurisdictions and pursue investment opportunities that drive economic growth, create jobs, and generate tax revenue in countries around the world.
Benefits of Tax Neutrality
Tax Neutrality is defined by a “provide benefits and do no harm” approach that offers advantages to countries, businesses, and people around the world. Tax Neutrality positively impacts both developed and developing countries and, by its definition, does not cause tax harm to other countries because it does not affect other countries’ taxing rights.
Discover the global impact of Tax Neutrality
Simple & Transparent
Stated and effective tax rates are the same.
Does not add an extra layer of taxes to transactions.
Secure & Compliant
Combats tax evasion with legislation, regulation, and automatic tax information sharing arrangements that uphold the highest international standards for transparency and cross-border cooperation.
Poses no risk for aggressive tax avoidance as it does not have tax treaties that provide opportunities for abuse or misuse.
Meets OECD economic substance requirements and therefore poses no risk of unfair tax competition.
Fair & Balanced
Alleviates double taxation on:
Cross-border transactions. Taxing rights are automatically allocated to the other country, which is free to apply its domestic tax policy on cross-border transactions.
Retained profits in a subsidiary. Taxing rights are automatically allocated to the parent entity jurisdiction, which is then free to apply its domestic tax policy — including controlled foreign corporation rules — on the parent entity relating to the subsidiary’s retained profits.
Logical & Local
Generally raises revenue through consumption taxes to fund government services and programmes.