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United States Ranks Third Among Tax Havens For Foreign Companies On Financial Secrecy Index By Tax Justice Network

by Diana Tomale / Nov 30, 2015 02:48 AM EST
United States ranks third among tax havens for foreign companies, according to a recent Financial Secrecy Index report. (Photo by Spencer Platt / Getty Images)

Tax Justice Network's biannual Financial Secrecy Index revealed United States as one of the tax havens for foreign businesses despite its Foreign Account Tax Compliance Act (FATCA).

The Huffington Post noted Nov. 2 that the US landed the third spot behind Hong Kong and Switzerland as the tax havens for foreign companies.

"An estimated $21 to $32 trillion of private financial wealth is located, untaxed or lightly taxed, in secrecy jurisdictions around the world," the report revealed.

The report also noted that "tax havens" are countries that "use secrecy to attract illicit and illegitimate or abusive financial flows." The report further revealed that states such as Delaware and Nevada are considered tax havens.

These states reportedly allow foreign companies generate revenues while keeping away from taxes in their home nations.

The recent report revealed that such businesses are evident in the US despite the implementation of FATCA that requires "non-US banks and financial institutions around the world to reveal American account details or risk big penalties," as noted by Forbes.

"Though the US has been a pioneer in defending itself from foreign secrecy jurisdictions, aggressively taking on the Swiss banking establishment and setting up its technically quite strong Foreign Account Tax Compliance Act (FATCA) - it provides little information in return to other countries, making it a formidable, harmful and irresponsible secrecy jurisdiction at both the Federal and state levels," the report said.

According to the Financial Secrecy Index report, "at least 358 companies, nearly 72 percent of the Fortune 500, operate subsidiaries in tax haven jurisdictions as of the end of 2014," noting that all of these firms preserve at least 7,622 tax haven subsidiaries.

Further reports have revealed that fortune 500 companies reportedly are accountable for over $1.2 trillion in accumulated revenues offshore to avoid taxes.

"Congress can and should take strong action to prevent corporations from using offshore tax havens, which in turn would restore basic fairness to the tax system, reduce the deficit and improve the functioning of markets," the study's conclusion.

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