page_title: Tax haven
section_title: GDP-per-capita
hierarchical_section_title: Tax haven / Incentives / GDP-per-capita
caption_attribution_description: English: "w:Paul Krugman lectured on "After Bush - The End of the Neo-Conservatives and the Moment for the Democrats" to over 500 guests in the jam-packed big lecture hall at the German National Library in Frankfurt"
context_page_description: A tax haven is a country or place with very low "effective" rates of taxation for foreign investors. In some traditional definitions, a tax haven also offers financial secrecy. However, while countries with high levels of secrecy but also high rates of taxation can feature in some tax haven lists, they are not universally considered as tax havens. In contrast, countries with lower levels of secrecy but also low "effective" rates of taxation, appear in most § Tax haven lists. The consensus around effective tax rates has led academics to note that the term "tax haven" and "offshore financial centre" are almost synonymous.
  Traditional tax havens, like Jersey, are open about zero rates of taxation, but as a consequence have limited bilateral tax treaties. Modern corporate tax havens have non-zero "headline" rates of taxation and high levels of OECD-compliance, and thus have large networks of bilateral tax treaties. However, their base erosion and profit shifting tools enable corporates to achieve "effective" tax rates closer to zero, not just in the haven but in all countries with which the haven has tax treaties; putting them on tax haven lists.
context_section_description: Tax havens have high GDP-per-capita rankings, as their "headline" economic statistics are artificially inflated by the BEPS flows that add to the haven's GDP, but are not taxable in the haven.  As the largest facilitators of BEPS flows, corporate-focused tax havens, in particular, make up most of the top 10-15 GDP-per-capita tables, excluding oil and gas nations (see table below).  Research into tax havens suggest a high GDP-per-capita score, in the absence of material natural resources, as an important proxy indicator of a tax haven.  At the core of the FSF-IMF definition of an offshore financial centre is a country where the financial BEPS flows are out of proportion to the size of the indigenous economy.  Apple's Q1 2015 "leprechaun economics" BEPS transaction in Ireland was a dramatic example, which caused Ireland to abandon its GDP and GNP metrics in February 2017, in favour of a new metric, modified gross national income, or GNI*.
  The artificial inflation of GDP can attract underpriced foreign capital (who use the "headline" Debt-to-GDP metric of the haven), thus producing phases of stronger economic growth.  However, the increased leverage leads to more severe credit cycles, particularly where the artificial nature of the GDP is exposed to foreign investors.
  Notes:
  Data is sourced from List of countries by GDP (PPP) per capita and the figures, where shown (marked by, ‡), are USD per capita for places that are not tax havens.
  "Top 10 Tax Haven" in the table refers to the § Top 10 tax havens above; 6 of the 9 tax havens that appear in all § Top 10 tax havens are represented above (Ireland, Singapore, Switzerland, the Netherlands, Luxembourg and Hong Kong), and the remaining 3 havens (Cayman Islands, Bermuda, British Virgin Islands), do not appear in World Bank-IMF GDP-per-capita tables.
  "Conduit OFC" and "Sink OFC" refers to University of Amsterdam's CORPNET's 2017 Conduit and Sink OFCs study
caption: Nobel Prize-winning economist Paul Krugman called the 2015 restatement of Ireland's national accounts, as a result of the Q1 2015 restructuring of Apple's BEPS tools, "leprechaun economics".
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