View the world’s most valuable bank brands

The largest private tax havens in the world

When the world’s ultra-rich seek tax havens to protect the income and wealth of their national governments, who do they turn to?

If you are putting money in offshore bank accounts to save on taxes, there are two main criteria that you are looking for: secrecy and accessibility. Based on pop culture and media reports, you might imagine a secret bank in Switzerland or a small island nation in the Caribbean.

And while there is some truth to this logic, the reality is that the world’s largest tax havens are spread across the globe. Some of them are small nations as expected, but others are great economic powers that may surprise.

Here are the 20 best tax havens in the world, according to the 2020 ranking Financial secrecy index (FSI) by the English NGO Tax Justice Network.

Which countries are the biggest tax havens?

The ISF ranks countries and territories around the world on two criteria: secrecy and scale.

  • Secret level: How well can the jurisdiction’s banking system hide money? This includes the analysis of property registration, transparency of legal entities, tax and financial regulations and cooperation with international standards.
  • Global Weight: What is the jurisdiction’s share in the global total for cross-border financial services? This measure is based mainly on the IMF Balance of payments statistics.

By weighing a country’s ability to hide money against its relative share of offshore financial services, we see tax havens with the greatest impact on the global economy.

Rank Jurisdiction Region
1 🇰🇾 Cayman Islands Caribbean
2 United States North America
3 Swiss Europe
4 Hong Kong East Asia
5 🇸🇬 Singapore South East Asia
6 Luxembourgish Europe
seven Japan East Asia
8 Netherlands Europe
9 British Virgin Islands Caribbean
ten 🇦🇪 United Arab Emirates Middle East
11 Guernsey Europe
12 UK Europe
13 Taiwan East Asia
14 Germany Europe
15 Panama Caribbean
16 Jersey Europe
17 🇹🇭 Thailand South East Asia
18 🇲🇹 Malta Europe
19 Canada North America
20 Qatar Middle East

At a glance, the 20 main tax havens are divided between regions. Just under half of the list is in Europe, but the rest is spread across the Americas and Asia.

And the jurisdictions are opposed in many ways. They include financial powers like the we, Japan, and the UK as well as smaller nations and territories like the Cayman Islands, Hong Kong, and Luxembourg.

But one surprising thing that many of them have in common is a link to England. Besides the UK, four of the top 20 tax havens (Cayman Islands, British Virgin Islands, Guernsey and Jersey) are British Overseas Territories or Crown Dependencies.

It is also worth noting the importance of scale in rankings. The best-ranked jurisdictions by secrecy score were in fact the Maldives, Angola and Algeria, but they represent less than 0.1% of total offshore financial services.

Best place to hide private vs. Corporation tax

Some of the tax havens listed can be confusing for nationals of these countries, but this is where relativity is important. The US and Canada may not be tax havens for US or Canadian nationals, but the ultra-rich in East Asia and the Middle East would use them due to loopholes in tax laws foreigners. Likewise, the United Arab Emirates have would have become a tax haven for the ultra-rich in Africa.

In addition, many countries used as tax havens for individual wealth are also used by businesses.

The Tax Justice Network’s 2021 assessment corporate tax havens listed on British Virgin Islands, Cayman Islands, and Bermuda as the three main tax havens for businesses.

While individuals can set up shell companies in tax havens to hide their wealth, companies are generally incorporated directly in the tax haven in order to defer taxes.

But the landscape of tax havens may soon change. The G7 reached an agreement in June 2021 to start taxing multinational companies based on the income generated in each country (instead of where the company is based), as well as setting a global minimum tax of 15 %. In total, a group of 130 countries have accepted the agreement, including India, China, the UK, and the Cayman Islands.

As the campaign to bring back deferred taxes intensifies, the question becomes a question of answer. Will ultra-wealthy individuals and businesses start working in tandem with the new rules, or will they discover new workarounds and new tax havens?

Shawanda H. Saldana