tax haven

A country or territory that offers low *tax rates or *tax avoidance benefits to individuals or organizations. The economic impact of tax havens tends to be wildly disproportionate to their size. Tax havens are often small island nations or tiny territories at the geographical fringes of major economies, but it is estimated that as much as one-third of the world’s Gross Domestic Product passes through them at some point (Mitchell et al., 2002). The Organization for Economic Co-operation and Development (OECD) has brought pressure on territories it suspects of facilitating *tax evasion or *money laundering. In 2000, for example, the OECD drafted a list of thirty-five "uncooperative" countries and territories it criticized for allegedly poor standards of financial transparency, tax Regulation, and exchange of information. Most of the territories subsequently committed to improvements in regulation and transparency, but by the end of 2003 the OECD still identified five jurisdictions on its list. Further reading: Mitchell et al. (2002) Web site: www.oecd.org