The Financial Secrecy Index recently introduced by the independent Tax Justice Network (TJN) reveals that the U.S. performs more offshore financial activities and is more secret than many famous tax havens, such as Cayman Islands, Luxembourg, and Singapore. The Financial Secrecy Index is based on: (i) the level of financial secrecy provided by the examined jurisdictions as well as(ii) the intensity of offshore activities conducted in those jurisdictions.
According to the Financial Secrecy Index, the U.S. takes one of the highest positions in the ranking because the country offers numerous tax avoidance and secrecy facilities to non-residents on both state and federal level. For example, the loopholes in the U.S. tax system allow supporting tax evasion and attracting illicit financial flows. TJN stresses that three U.S. states, namely, Delaware, Wyoming, and Nevada, are known as tax havens for a long time. The reason is that they offer favorable tax regimes to non-residents, host shell companies, and enable the hiding of assets.
Although the U.S. administration continuously introduces measures for limiting foreign tax secrecy (e.g., the Incorporation Transparency and Law Enforcement Assistance Act and Stop Tax Haven Abuse Act), the United States still remains one of the major offshore jurisdictions in the world. According to TJN, Switzerland and Hong Kong are the most secret offshore jurisdictions on the planet.
