Edexcel A-Level Geography 9GE0
Tectonic Processes and Hazards
Glaciated Landscapes and ChangeLandscape
Coastal Landscapes and ChangeLandscape
Globalisation
Regenerating PlacesPlaces
Diverse PlacesPlaces
The Water Cycle and Water Insecurity
The Carbon Cycle and Energy Security
Superpowers
Health, Human Rights and InterventionConnections
Migration, Identity and SovereigntyConnections
Migration, Identity and Sovereignty
Tax havens, new state forms and alternatives to capitalism
- 3 things to know
- Paper 2
Overview
How globalisation and deregulated capital markets produced tax havens as a new state form used by TNCs and wealthy individuals, their link to inequality, responses from governments, the OECD and NGOs, the 2021 global minimum tax and the Panama Papers, and alternative models in Bolivia under Evo Morales and Ecuador under Rafael Correa.
What you need to know
Answer each one before you reveal it.
Define the term 'tax haven'.
How do transnational corporations take advantage of low-tax regime states?
Questions from this subtopic
Each one with the model answer underneath.
- 1
How has globalisation influenced the development of states with low-tax regimes?
Model answer
It has made room for small states that set taxes low enough to attract company profits and private fortunes from elsewhere.
- 2
Define the term 'tax haven'.
Model answer
A tax haven is a state that has developed a low-tax regime as a consequence of globalisation and capital market deregulation.
- 3
How do transnational corporations take advantage of low-tax regime states?
Model answer
TNCs relocate their profits to low-tax jurisdictions to reduce their overall tax burden.
- 4
Why do wealthy individuals establish residence in tax haven states?
Model answer
Wealthy individuals establish residence in tax havens to gain tax advantages on their personal wealth and income.
- 5
In what sense do tax haven states represent a 'new state form'?
Model answer
Tax haven states represent a new state form because they have emerged specifically in response to globalisation and capital market deregulation, developing their economies around attracting mobile international capital.
- 6
Why have new state forms emerged in response to mobile capital under globalisation?
Model answer
New state forms have emerged because some states have deliberately developed low-tax regimes to attract the mobile capital that deregulation has made available, creating a competitive advantage in the global economy.
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