how do “tax haven” countries survive without taxing corporations or individuals?



Where do the governments get money from?

In: Economics

It’s not about 0% tax. It’s about almost 0%. The idea is to make it a very small amount to attract people in from elsewhere. A small percentage of a *lot* of money can be bigger than a reasonable percentage of a small amount of money.

Tax havens do collect taxes. They don’t collect taxes on specific things, or demand a lot less than other countries.

The cayman islands are the most extreme example. They only collect import tarrifs, sell work licenses and have a tax on tourist bed rentals. So even they tax things, just not things that big international companies are interested in.

Panama is less extreme. They tax locals just normally, but money earned outside the country isn’t taxed at all.

Also being a tax haven makes people found daughter companies in your country, for wich you can demand a fee. A corporation won’t care to pay some 50k$ for that when they save billions in taxes over the years

Some tax what residents earn but not what foreign businesspeople gain in the country. See what they did there?