The IUP Journal of Corporate Governance
The Role of Tax Havens in Base Erosion and Profit Shifting: Impact on Indian Economy

Article Details
Pub. Date : Oct, 2021
Product Name : The IUP Journal of Corporate Governance
Product Type : Article
Product Code : IJCG41021
Author Name Shweta Jain
Availability : YES
Subject/Domain : Management
Download Format : PDF Format
No. of Pages : 17



The use of tax havens leads to a loss of tax income for non-tax haven countries. Capital stored in tax havens has the potential to erode the tax base permanently, which is called base erosion. A tax haven is a nation, location, or jurisdiction with an extremely low rate of taxation. This low rate of taxes even goes as low as zero per cent in some cases. Tax havens through their way of working help to make this tax evasion seem legal. India being a developing economy is affected by tax evasion. The paper covers the legal mechanism, rules and regulations, and the technology adopted by government to control this huge loss of tax revenue.


Income tax becomes a necessary obligation to guarantee that a country's government runs properly and provides the resources that its inhabitants require. As a result, income tax should be viewed as a responsibility to complete rather than a burden to endure. Paying taxes is a burden for many people, and they frequently devise methods to avoid or decrease the cost. Tax evasion happens when a person or a company fails to pay their taxes or pays only a portion of it.

Low taxation is commonly used by governments of various countries to attract foreign investment and enhance cash flow into their economies. By levying a low tax rate, it encourages large multinational organizations and enterprises to establish operations in these nations, thus assisting in the growth of their economies and bringing them into the global spotlight.