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Consider the following statements:
1. The tax havens are offshore countries that offer foreign individuals and businesses little or no tax liability.
2. The tax havens require residency or business presence for individuals and businesses to benefit from their tax policies.
3. The Standard for Automatic Exchange of Financial Account Information aims to increase the enforcement of offshore investment reporting.
Which of the statements given above is/are correct?
  • a)
    1 and 3 only
  • b)
    2 and 3 only
  • c)
    3 only
  • d)
    1, 2 and 3
Correct answer is option 'A'. Can you explain this answer?
Verified Answer
Consider the following statements:1. The tax havens are offshore count...
  • A tax haven is generally an offshore country that offers foreign individuals and businesses little or no tax liability in a politically and economically static environment. Hence, statement 1 is correct.
    • Characteristics of tax haven countries generally include no or low-income taxes, minimal reporting of information, lack of transparency obligations, lack of local presence requirements, and marketing of tax haven vehicles.
    • Generally, tax havens do not require residency or business presence for individuals and businesses to benefit from their tax policies. Hence, statement 2 is not correct.
    • Individuals and corporations can potentially benefit from low or no taxes charged on income in foreign countries where loopholes, credits, or other special tax considerations may be allowed in accordance with the law.
  • Worldwide, there are some programs in place to increase the enforcement of offshore investment reporting.
  • The Standard for Automatic Exchange of Financial Account Information, developed by the OECD with G20 countries, represents the international consensus on automatic exchange of financial account information for tax purposes, on a reciprocal basis. Hence, statement 3 is correct.
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Consider the following statements:1. The tax havens are offshore countries that offer foreign individuals and businesses little or no tax liability.2. The tax havens require residency or business presence for individuals and businesses to benefit from their tax policies.3. The Standard for Automatic Exchange of Financial Account Information aims to increase the enforcement of offshore investment reporting.Which of the statements given above is/are correct?a)1 and 3 onlyb)2 and 3 onlyc)3 onlyd)1, 2 and 3Correct answer is option 'A'. Can you explain this answer?
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