An Alternative to Offshore Tax Havens

Summary: Maldives comes out on top in a World Bank survey into which nations make paying tax easy and affordable

When one thinks of the Maldives one immediately conjures up images of white sandy beaches, glorious weather and a dream holiday destination; one does not imagine the destination as an alternative to offshore tax havens like Jersey or the Isle of Man…but that is just what the Maldives appears to be!

In a truly fascinating report issued by The World Bank in association with PricewaterhouseCoopers entitled “Paying Taxes: The Global Picture” which forms part of the World Bank’s “Doing Business Project,” the Maldives comes out on top of all other nations in the world as the easiest country to pay tax in and the country with the lowest total tax rate of all.

According to the findings of the “Paying Taxes: The Global Picture” report, Maldives as a jurisdiction is listed as a ‘tax haven’ and lumped together under the general term with the likes of St. Lucia, the UAE and Saudi Arabia.  However, according to the Organisation for Economic Co-operation and Development the Maldives are not considered to be a tax haven profiting from harmful tax competition…

Back in 2002 the OECD reviewed Maldives and was happy to determine that the tax advantaged jurisdiction does not meet the criteria identified by the 1998 “Harmful Tax Competition: An Emerging Global Issue” report – this means that Maldives represents an acceptable alternative to the offshore tax havens that the OECD finds unacceptable. 

According to the Organisation for Economic Co-operation and Development analysis of the Maldives, the nation operates in a transparent way and has no laws in place that restrict or prevent the full exchange of information.

It is important to bear this point in mind when referring back to the “Paying Taxes: The Global Picture” report from the World Bank and PricewaterhouseCoopers – the report may term Maldives ‘a tax haven’ but that does not mean it is a harmfully tax prejudiced jurisdiction – so, in other words this adds even more to the appeal of the jurisdiction because it has the lowest total tax rate of all 175 countries covered by the report and it is the easiest country to pay tax in and at the same time it is a nation where taxation is attractively and legally low!

Surely all of these hugely positive factors that are in the Maldives favour mean that more and more companies should consider it as an alternative to tax havens where they attempt to create company or trust structures to efficiently manage their taxation and benefit from taxation saving advantages available, but where in reality the complications associated with the filing of tax returns could negate many of the savings gained by ‘going offshore’ in the first place?

The main point that the “Paying Taxes: The Global Picture” report is trying to make to the world’s governments is that there is a necessity to make the paying of taxes far easier if nations are to attract business, root out tax evasion, prevent inadvertent tax avoidance and clearly the Maldives has got the balance absolutely right making it a nation that sets a good example and a nation worth considering as an alternative to offshore tax havens for those seeking a secure and simple jurisdiction from which to conduct their company’s activities.

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