World's top tax havens

Even if you've worked for some years trying to prevent the problems caused by tax havens, people will still ask you which places are the best in the world to shield your money from taxes. Working with the Tax Justice Network I set out to provide a definitive answer.

"Best" is, of course, a pretty subjective term, so it needed definition. We used two. The first was a measure of a place's opacity, or how secret it is. There's good reason for that. Some time ago I gave up trying to define what a tax haven is, as that proved to be a pretty thankless task. Instead I suggested that unless a place is a secrecy jurisdiction, which means that regulation is intentionally created for the primary benefit and use of those not resident there, it really can't operate as a tax haven. In effect, secrecy jurisdictions create regulation that is designed to undermine the legislation or regulation of another jurisdiction.

To facilitate its use, secrecy jurisdictions also create a deliberate, legally backed veil of secrecy that shields the identities of those making use of its flexible regulatory system. This is important. Even though people who use secrecy jurisdiction claim their activities are perfectly legal, it seems they don't want people to find out about them. So secrecy is a key.

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Secondly, enjoying secrecy in a place that does not have the know-how to handle money is not of much use if, like most users of secrecy jurisdictions, you want to move money without too many questions being asked. That's why we added another criterion, a pretty simple one: To be considered significant, a place had to have the capability to move money in serious quantities, or it just didn't rank.

These two characteristics, when combined, create an index of secrecy jurisdictions, or tax havens if you prefer, called the Financial Secrecy Index.

The research was fascinating. First we had to determine what places were secrecy jurisdictions. To do this we created a "list of lists" looking at tax haven listings over a period of more than 30 years and selecting for testing, broadly speaking, all those that came on two lists or more over that period. Then our team researched data on a wide range of issues - about 200 variables per location.

Twelve criteria were then selected as key indicators of opacity, varying from whether there was formal banking secrecy or not, to whether accounts were required to be on public record, to how many tax information exchange agreements the jurisdictions had. The place got a mark for being opaque and none if it was transparent. This produced a list of the usual suspects: Switzerland, Malaysia (Labuan), Barbados, Bahamas, Vanuatu, Belize, Brunei, Dominica, Samoa, Seychelles, St. Lucia, St. Vincent and Grenadine, and Turks and Caicos.

Image: Singapore

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