Low-tax jurisdictions, previously known as tax havens, have evolved over the years to adjust to increased international scrutiny and a changing tax legislative environment. However, many companies have come under international scrutiny because of their low effective tax rates — despite having relied on the instruments negotiated by their own governments. Ernest Mazansky, head of tax at Werksmans, says one of the main reasons companies choose to operate in a low tax jurisdiction is because of the benefit of paying a low tax rate. Tax is a cost like any other and has to be managed by management. If a company cannot operate equally well in a high tax jurisdiction and a low tax jurisdiction, why would it not choose to set up in the low tax jurisdiction, he remarked at the annual Tax Indaba in Sandton. Mazansky says it is necessary to define what is a low tax jurisdiction. Some are so defined because of their low statutory tax rates — such as Mauritius or the Cayman Islands. However, the...
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