Detrimental tax competition in the European Union
- Presentation of the country
- Legal Risks
- Political risks
- Cultural risks
- Financial risks
- To Resume Ecuadorian's risks
- Form of Internal Business to be used to enter the foreign market
The foundation for the globalization of the twenty-first century was established in the last decades of the twentieth century, when technology made the most important advances since the invention of the wheel. Satellites, fax, mobile phones, the Internet and email have encompassed the size of the world to the surface of a Palm Pilot. Although the concept of national sovereignty is still applicable, the development of technology simplifies the increasing movements of people, capital and goods, which implies that the boundaries between different sovereign states appear less real and binding.
These radical changes in the world of communications and transportation have made government control of the movement of ideas, people and goods and services more difficult. Rivers, mountains and imaginary lines that define the borders continue to exist; however, the national sovereignty which they imply and represent is fading. By adopting a tendency marked by the increasing accumulation of goods and fortunes, many multinational groups today often have budgets higher than those of the States in which they operate.
They have all the tools at their disposal that are necessary to circumvent the tax barriers, usually restricted to national levels, be they lawyers, tax specialists, accountants, auditors or corporate banks offering individual solutions called "private banking?. The goal is to minimize costs and maximize profits; money is the main motivation of all these actors.
Money has long been a political force, yet it has never been so easy today to divert, to conceal, and to reinvest. Today, some 65 UN member states provide banking solutions to customers seeking discretion, more or less pronounced depending on the country. Recent estimates show that more than 4000 banks operate today in the offshore world, most with no physical presence.The extent of industrial relocation, development of services, the explosion in the volume of capital flows and the increasing complexity of distribution networks are just some of the many factors that increase the opportunities for evasion and avoidance of tax.
Having to go through tax havens or countries with privileged taxation for economic operation does not make it automatically illegal. We must first make a distinction between tax fraud and tax evasion. It should be noted that tax evasion can still be sanctioned if the administration demonstrates an abuse of law, that is to say, if the actions have been implemented for the sole purpose of playing down a notional tax.
Tax evasion is a crime under section 1741 of the CGI, which is defined as "removal or attempted fraudulent evasion in the establishment or the payment of all or part of the tax.With a significant part of global money flow going on today through tax havens, it has become common practice and generally accepted. Same repressive regimes like the People's Republic of China have established areas with tax advantages e.g. Hong Kong and Shanghai.
In such a context of rapid globalization of trade and capital movements, national governments find themselves in a competitive situation, on the one hand trying to limit capital flight and relocation of businesses and maintain its tax revenues and on the other hand, to remain attractive to foreign investment and to attract tax bases of third countries offering attractive tax regimes.
Tags: globalization of trade, Tax evasion, private banking