What is tax heaven system? | 外資系企業の税務・経理代行サポート| 国際税務に強い森永会計事務所

What is Tax Haven Taxation？

If a domestic company do international trade through foreign affiliates located in a low tax country or jurisdiction (tax haven), that company can avoid undue tax burden by going through this foreign affiliates, or even escape taxation in Japan as a result.

Controlled Foreign Companies (CFC) tax is a system to deal with those possible tax avoidance acts, by attributing a proportion of the income sheltered in tax haven to that of the domestic company and it imposes tax to the sum of those.