A tax haven is a country with a low or no income tax, making it an attractive destination for individuals and companies looking to reduce their tax burden. Option A refers to tax minimization strategies, while option B refers to a tax treaty between two countries. Option C refers to the deferral of taxes, which is a common strategy for multinational corporations, but is not specific to tax havens.

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A Tax Haven

Question 64

Multiple Choice

A tax haven:

A) allows an entity to reduce the taxes paid to the home government and those paid to foreign governments.
B) directs both the host-country government and the parent company's home government not to tax the income of a foreign subsidiary.
C) specifies that parent companies are not taxed on foreign source income until they actually receive a dividend.
D) is a country with an exceptionally low,or even no,income tax.

Correct Answer: