The world’s tax havens, along with providing financial protection to companies, are also involved in environmental destruction in the Amazon and illegal fishing.
For lack of a legal definition of tax havens, the Organization for Economic Cooperation and Development (OECD) considers four key factors to help define them:
1) No or nominal tax on relevant income. 2) Lack of effective exchange of information. 3) Lack of transparency. 4) No substantial activities.
The OECD keeps a list of “uncooperative tax havens” and works with the world’s nations to improve transparency and the exchange of tax-related information.
Tax havens offer tax incentives that attract large corporations’ hedge funds and rich individuals, sparing them from heavy taxation in their home country.
Last year, millions of leaked documents called the “Paradise Papers” revealed that many multinational corporations, political leaders, and ultra-rich individuals resort to offshore tax havens to hide their cash.
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