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Tax Havens - An Insidious Mechanism for Evading Tax Obligations

Narciz Balasoiu ()
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Narciz Balasoiu: Academy of Economic Studies, Faculty of International Business, Bucharest, Romania

RAIS Conference Proceedings 2021 from Research Association for Interdisciplinary Studies

Abstract: The development of world trade along with accelerated globalization has an effect not only on economic development or the strengthening of international cooperation, but also facilitated sophisticated mechanisms by which the payment of tax obligations by multinational companies is circumvented. Transfer pricing and tax havens, considered both individual and combined practices, negatively affect a country's ability to implement fiscal policy and improve budget revenue collection capacity. The problem is even greater in the case of states with a fragile economy, where the dynamics of development is vitally related to the elimination of legal, immoral or illegal tax evasion practices. The Transfer pricing mechanism has also been optimized to handle taxable transactions between companies affiliated to a particular group. Multinational companies avoid taxes by overestimating imports and underestimating exports, thus managing to distribute revenues in various regions of the globe that have great tax advantages.

Keywords: tax havens; profit shifting; tax evasion; corporation; fiscal legislation (search for similar items in EconPapers)
Pages: 5 pages
Date: 2021-06
New Economics Papers: this item is included in nep-cwa, nep-iue and nep-pbe
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Published in Proceedings of the 22nd International RAIS Conference on Social Sciences and Humanities, June 20-21, 2021, pages 18-22

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