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Corporate haven

Corporate haven Definition

A corporate haven is a jurisdiction with laws friendly to corporations thereby encouraging them to choose that jurisdiction as a legal domicile. Within the United States, Delaware is considered the pre-eminent corporate haven. However it is facing competition from Nevada and Wyoming. While Delaware through its developed legal system and laws protecting shareholder rights is geared toward the large complex public corporation, Nevada and Wyoming are more attractive to the small privately-held corporation. Delaware law tends to protect the rights of shareholders, and Nevada and Wyoming tend to favor management.

Corporate havens outside the United States include British crown colonies such as Bermuda and the Cayman Islands. These havens are widely used by people and other entities from various places, particularly Hong Kong. Increasingly, U.S. corporations are using these havens, either by incorporating subsidiary corporations in these locations or by moving their corporate domicile there.

United States tax law can make these offshore corporate havens very unattractive to individual citizens, because U.S. citizens are taxed by the U.S. government on their world-wide income. Of note is that tax deductions and credits are allowed to individual citizens in certain instances for income from foreign sources to avoid double taxation.


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