Tax haven't a uniform character and can vary significantly. The separation of their individual types is largely a doctrinal gain and is not normative in the legislation of most countries. Different types of tax havens can be distinguished by different criteria.
The criteria for including certain countries or territories in one or other categories are usually economic, fiscal or geographical.
Polish law has never held or held any classification of countries and territories applying harmful tax competition according to the criterion of their degree of harm for the purposes of one or another group of taxes or a specific tax.
MF Regulations dated 16 May 2005 on the identification of countries and territories applying harmful tax competition for corporate tax purposes, (Journal of Laws of 2005, item 791) and for the purposes of personal income tax, (Journal of Laws of 2005, item 790) contain only the calculation of countries and territories applying harmful tax competition for income tax purposes.
This calculation does not take into account the degree of this harmfulness, which is undoubtedly not the same. There are a number of tax haven divisions in legal sciences according to different criteria. The classifications below are therefore not normative.
According to the criterion of income and property tax rates, it is possible to distinguish two types of tax havens:
- • applying very low rates of these taxes, which are significantly different from those commonly adopted in developed countries,
- • not imposing income or property taxes: in general or in relation to income from specific sources (usually foreign sources).
In accordance with the criterion of binding double taxation agreements with a given State, tax havens may be divided into: This division is extremely important from the perspective of the individual developed countries to avoid the negative consequences of harmful tax competition, as the countries and territories applying it, linked to double taxation agreements, pose a significant threat to the fiscal interests of the countries that have signed such agreements with them.
This risk also applies to countries that have not signed these agreements with harmful tax regimes, but have concluded them with other countries with signed tax agreements with countries (territories) applying harmful competition for tax purposes.
This situation makes it possible to avoid taxation in the home country of the tax residence through the so-called acquisition of contractual benefits resulting from contracts not falling within the scope of the non-residents of the countries concerned.
Economic criteria for the breakdown of tax havens should also include their classification, given the nature of the specific financial facilities offered by them. According to the above criterion, countries and territories applying harmful tax competition may be divided into:
- •
- applying special tax advantages,
- •
- applying non-tax but financial facilities, such as high interest rates on bank deposits, restrictive banking secrecy rules, and the absence or substantial restrictions on the exchange of information and cooperation with tax authorities of other countries.
This classification is important especially for countries and territories that use harmful tax practices but are at a high level of economic development. Some European and South Asian countries are among the above atypical tax oases. The classification of these countries (territories) as tax havens usually prejudges a particular type of tax facilities not relating to their entire system of tax law but belonging to a specific category of entities. According to the criterion of type of special tax facilities, countries and territories applying harmful tax competition may be divided into:
- •
- not imposing taxes on foreign income,
- •
- granting tax relief in specific situations or in relation to certain entities,
- •
- applying the so-called holding privilege.
However, according to the geographical location criterion, tax havens can be divided into inland, coastal and island havens. However, this division is ancillary, as is the criterion on which it was based, since the geographical factor does not in itself prejudge the recognition of a particular state as a tax haven.
A separate type of classification of tax havens are their lists, created on the basis of very diverse and subjective criteria by prominent scholars, specialists in the field of international tax law, as well as dealing with this subject of international institutions and organisations, hence the individual lists may differ significantly.
Lists of tax havens are also created by individual states, as a form of separation of states recognised by the State making such lists as harmful to all other countries. Individual countries prepare 3 types of these letters: white, grey and black.
However, only grey and black lists contain a list of countries and territories with different levels of harmful tax treatment, as white lists contain a list of countries (territories) which are not tax-sensitive in the eyes of the country making the list.
The black lists include countries (territories) unconditionally regarded as tax harmful, using internationally unacceptable and considered unfair tax practices. The grey lists mention countries (territories) whose legal systems under certain conditions may be considered tax harmful.
The conditions which allow a country (territory) to be considered harmful for tax purposes shall be determined by the legislation of the country making the list.
Individual countries drawing up lists of countries and territories applying injurious tax competition may only have a list one of a kind, since, for example, the listing of non-tax harmful countries means that all other countries apply unfair tax practices in the light of the legislation of the country making up the list.
A separate issue is the normative treatment of the criteria on which individual lists of the definition ‘by calculation’ are drawn up, resulting in negative consequences for the countries listed on such lists (for black and grey lists) or those not included in the list (for white lists).
The negative consequences are also borne by entities established or resident in those countries (territories), as well as by other natural and legal persons engaged in business transactions with those entities.
Transparency and the normative nature of the criteria for such classification may be relevant to the mutual relationship between the list country and the countries and territories included in that list (black and grey lists) or not (white lists).
Otherwise, an allegation of unfounded sanctions and unfair treatment by the State which drew up the list on the basis of unclear criteria may be raised in the relations of the States concerned.
The allegation of tax discrimination may have an important diplomatic aspect, as it refers to official interstate relations, and it is therefore important not only to draw up a list of countries and territories applying harmful tax competition, but also to take the normative account of the criteria on which this list has been drawn up.