The world is witnessing a severe recession, jobs are vanishing with unemployment rates rising sky-high, major businesses are going under -- financially, none of us has experienced such hard times ever.
And now visualise the other side of the coin -- trillions of dollars stashed away safely in a tax haven, wealthy tax evaders saving billions and getting richer. . .
How much 'dirty' money is there? Well, there is no exact figure, but the Organisation for Economic Cooperation and Development estimates that at least $11 trillion have been stashed away globally. That is roughly about Rs 5,55,50,000 crore!
India loses a great deal of tax money as firms and individuals park billions into tax havens the world over.
However, with the financial tsunami inundating the world, more and more countries are beginning to clamour for better tax conformity and transparency. Along with the United States and Japan, Germany and France too believe the offshore system not only deprives them of taxes, but also aggravates the financial crisis further.
The issue was dramatised by the case of UBS, the Swiss banking major, who in order to settle the charge that it promoted tax fraud, agreed to divulge the names of some 300 clients to the US. But US says it is yet to receive the names of another 47,000 (American) account holders suspected of tax evasion.
So check out the favourite nations where billions of dollars have been stashed away by the high and mighty. . .
Switzerland
In the three-tier list compiled by OECD, Switzerland was placed in the middle tier of countries, which have adopted the norms on exchanging tax information but not yet 'substantially' implemented them.
The Swiss, government, under tremendous pressure from the US, and few European nations decided on March 13 to ease the country's banking secrecy and fully adopt OECD tax standards.
Despite its complex federalistic political structure, Switzerland's tax structure is extremely simple.
Lump sum tax
Retired foreigners who become residents of Switzerland can choose to pay a lump sum annual tax, which is calculated based on their rental payments (or the rental value of their house or apartment) with no relation to their real income or wealth.
Income tax
Taxes depend on where you live, as the rate varies from canton to canton.
Wealth tax
Swiss cantons levy a small wealth tax of maximum 1% of your net assets.
Capital gains tax
Switzerland does not apply capital gains taxes, except for professional equity and real estate traders.
The world's rich hide at least $1.89 trn of the estimated $7 trn of private wealth according to the Swiss Bankers Association, though others put the figure much higher.
Switzerland passed its banking secrecy laws in 1934 during a worldwide depression and under the threat of espionage by France and Nazi Germany.
And after the 2001 terrorist attacks on the United States, Switzerland started takinga proactive role in investigating suspected financiers of global terrorism.
Cayman Islands
With no direct taxation, the islands are a thriving offshore financial centre.
More than 68,000 companies were registered in the Cayman Islands as of 2003, including almost 500 banks, 800 insurers, and 5,000 mutual funds.
Caymanians enjoy one of the highest standards of living in the world.
Anguilla
Caribbean, islands between the Caribbean Sea and North Atlantic Ocean, Anguilla is situated to the east of Puerto Rico.
Anguilla has few natural resources, and the economy depends heavily on luxury tourism, offshore banking, lobster fishing, and remittances from emigrants.
The Bahamas
A chain of islands in the North Atlantic Ocean, the Bahamas is located to the southeast of Florida and northeast of Cuba.
The Bahamas is one of the wealthiest Caribbean countries with an economy heavily dependent on tourism and offshore banking.
The Bahamas levies neither personal income nor capital gains tax, nor are there inheritance taxes.
Since December 2000, when the government started reforming the financial sector, many international businesses left the island.
Gibraltar
Gibraltar benefits from an extensive shipping trade and offshore banking.
It is no longer considered a non-cooperative tax haven since 30 June 2006.
Grenada
It is a Caribbean island situated between the Caribbean Sea and Atlantic Ocean to the north of Trinidad and Tobago.
Tourism is its main source of foreign exchange.
Isle of Man
It is an island in the Irish Sea, between Great Britain and Ireland.
The Isle of Man does not charge corporation tax, capital gains tax, inheritance tax or wealth tax.
Personal income tax is levied at 10-18 per cent on the worldwide income of Isle of Man residents, up to a maximum tax liability of pound 100,000
Antigua and Barbuda
Investment banking and financial services comprise an important part of the economy.
Banking majors like Bank of America, Barclays, Royal Bank of Canada, and Scotia Bank have subsidiaries in Antogua.
Recently Antigua based Stanford International Bank owned by Texas billionaire Allen Stanford was found guilty of orchestrating a huge fraud that may have cheated investors of some $8 billion.
Belize
A Central American nation, Belize borders the Caribbean Sea, between Guatemala and Mexico.
Essentially a private-enterprise economy, tourism is the number one foreign exchange earner for Belize, followed by exports of marine products, citrus, cane sugar, bananas, and garments.
It has no capital gains tax.
Turks and Caicos Islands
Its attraction lies in a combination of its tax exempt status and minimal disclosure and administrative requirements.
There are more than 15,000 international companies registered in the Turks and Caicos Islands.
The Turks and Caicos economy is based on tourism, offshore financial services, and fishing.
Marshall Islands
This Oceania nation is actually two archipelagic island chains of 29 atolls, each made up of many small islets, and five single islands. It's situated in the North Pacific Ocean, about half way between Hawaii and Australia.
US government assistance is the mainstay of this tiny island economy.
Montserrat
A Caribbean island, Montserrat is located in the Caribbean Sea, southeast of Puerto Rico.
Severe volcanic activities have hurt its economy.
The UK has launched a three-year $122.8 million aid program to help reconstruct the economy.
Niue
Industry consists primarily of small factories to process passion fruit, lime oil, honey, and coconut cream. Sale of postage stamps to foreign collectors is an important source of revenue.
The International Banking Repeal Act of 2002 terminated all its offshore banking licenses. Economic aid from New
Liberia
A West Africa nation it borders the North Atlantic Ocean, between Cote d'Ivoire and Sierra Leone.
Civil war and government mismanagement destroyed much of Liberia's economy.
Richly endowed with water, mineral resources, forests, and a climate favorable to agriculture, Liberia had been a producer and exporter of basic products - primarily raw timber and rubber. Local manufacturing, mainly foreign owned, had been small in scope.
Mauritius
Mauritius based front companies of foreign investors are used to avoid paying taxes in India utilising loopholes in the bilateral agreement on double taxation between the two countries.
The use of Mauritius as a gateway to funnel foreign investments into India has always been controversial.
The economy rests on sugar, tourism, textiles and apparel, and financial services, and is expanding into fish processing, information and communications technology, and hospitality and property development.
Panama
This Central American nation borders both the Caribbean Sea and the North Pacific Ocean, between Colombia and Costa Rica.
Panama's economy rests primarily on a well-developed services sector. Services include operating the Panama Canal, banking, the Colon Free Zone, insurance, container ports, flagship registry, and tourism.
Panama has the second most unequal income distribution in Latin America. The government has recently implemented both tax and social security reforms.
San Marino
Tourism contributes over 50 per cent of San Marino's GDP. Other key industries are banking, electronics, and ceramics.
San Marino's postage stamps, which are only valid for mail within the country, are mostly sold to philatelists and are a source of income.
Nauru
This island in the South Pacific Ocean lies to the south of the Marshall Islands.
Revenues of this tiny island have traditionally come from exports of phosphates.
Only tax in country is an airport departure tax.
Guernsey
Financial services - banking, fund management, insurance - account for about 23 per cent of employment and about 55 per cent of total income.
Light tax and death duties make Guernsey a popular tax haven.
Jersey
This Channel island is in the northwest of France.
Jersey's economy is based on international financial services, agriculture, and tourism.
Light taxes and death duties make the island a popular tax haven. Living standards come close to those of the UK.
Cyprus
Tourism, financial services, and real estate are the most important sectors.
According to the latest estimates of the International Monetary Fund, its per capita GDP (adjusted for purchasing power) is, at $28,381, just above the average of the European Union.
British Virgin Islands
These islands are situated between the Caribbean Sea and the North Atlantic Ocean to the east of Puerto Rico.
Adoption of a comprehensive insurance law in late 1994, which provides a blanket of confidentiality with regulated statutory gateways for investigation of criminal offenses, made the British Virgin Islands attractive to international business.
A KPMG report in 2000 indicated that the British Virgin Islands was home to approximately 41 per cent of the world's offshore companies.
Aruba
Tourism is the mainstay of the small, open Aruban economy, along with offshore banking and oil refining and storage.
Cook Islands
It comprise a group of islands in the South Pacific Ocean, about half way between Hawaii and New Zealand.
Economic development of Cook Islands is hindered by its isolation from foreign markets, limited size of domestic markets, lack of natural resources, periodic devastation from natural disasters, and inadequate infrastructure.
It is a major exporter of black pearls.
Dominica
It is an island between the Caribbean Sea and the North Atlantic Ocean, about half way between Puerto Rico and Trinidad and Tobago.
The Dominican economy depends on agriculture, primarily bananas, and remains highly vulnerable to climatic conditions and international economic developments.
Bermuda
Bermuda enjoys the third highest per capita income in the world, more than 50 per cent higher than that of the US.
Its economy is primarily based on providing financial services for international business and luxury facilities for tourists.
A number of reinsurance companies relocated to the island after September 11, terror attacks in the US and again after Hurricane Katrina in August 2005.
Bermuda does not levy income tax on foreign earnings, and allows foreign companies to incorporate there under an 'exempt' status.
Bahrain
Situated to the east of Saudi Arabia, Bahrain is an archipelago in the Persian Gulf in West Asia.
Bahrain is home to numerous multinational firms with business in the Gulf.
It is also focused on Islamic banking and is competing on an international scale with Malaysia as a worldwide banking centre.
Saint Vincent and the Grenadines
Much of the workforce is employed in banana production and tourism, but persistent high unemployment has prompted many to leave the islands.
Saint Vincent is home to a small offshore banking sector and has moved to adopt international regulatory standards.
Samoa
This group of islands in the South Pacific Ocean isabout half way between Hawaii and New Zealand.
The economy of Samoa has traditionally been dependent on development aid, family remittances from overseas, agriculture, and fishing.
The Samoan government has called for deregulation of the financial sector and continued fiscal discipline.
Netherlands Antilles
The islands' economy depends mostly upon tourism, international financial services, international commerce and shipping and petroleum.
The islands form an autonomous part of the Kingdom of the Netherlands.
US Virgin Islands
These Caribbean islands lie between the Caribbean Sea and the North Atlantic Ocean to the east of Puerto Rico.
Tourism is the primary economic activity.
It offers a 90 per cent exemption from US income taxes and 100 per cent exemption from all other taxes and customs duties to certain qualified taxpayers.
Malta
Shareholders of certain companies pay less than 5 per cent tax and dividend income where the company holds less than one per cent of equity is usually not taxed.
Malta's economy is dependent on foreign trade, manufacturing - especially electronics and pharmaceuticals - and tourism.
Saint Lucia
This island between the Caribbean Sea and North Atlantic Ocean lies to the north of Trinidad and Tobago.
The island nation has been able to attract foreign business and investment, especially in its offshore banking and tourism industries.
Vanuatu
This Oceania group of islands in the South Pacific Ocean lies about three-quarters of the way from Hawaii to Australia.
Its financial services commissioner announced in May 2008 that his country would reform its laws so as to cease being a tax haven.
Fishing, offshore financial services, and tourism are other mainstays of the economy.
Seychelles
Seychelles' growth has been led by its tourist sector and tuna fishing. In recent years, the government has encouraged foreign investment to upgrade hotels and other services.
It is, per capita, the most highly indebted country in the world according to the World Bank, with total public debt around 122.8 per cent of GDP.
St. Kitts & Nevis
These islands in the Caribbean Sea are about one-third of the way from Puerto Rico to Trinidad and Tobago.
St. Kitts and Nevis is heavily dependent upon tourism revenues, which has replaced sugar, the traditional mainstay of the economy.
Source : www.rediff.com
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