A tax haven is simply a country where certain taxes are at lower rates or nonexistent than other countries. The taxes themselves as well as their secretive nature is what attracts corporations to operate in those countries. Tax havens are part of off shoring where companies move part of their operations to the tax havens while continuing to profit in the "home" country. This process alone costs governments at least $255 billion per year in lost taxes according to Tax Justice Network. The Cayman Islands always come to mind whenever tax havens are discussed as well as other locales such as Switzerland, Bermuda, and even Delaware.
Transfer pricing is the process of setting up accounts where the transaction of the multinational company is charged. The accounts themselves are offshore that handle the price of the transactions between the main company and its subsidiary for example. These accounts are set up in the tax havens mentioned earlier, enabling even lower tax rates. The pricing policy that the company uses directly affects the amount of taxes the company will pay to the countries they operate in. This allows intra-company trade to increase significantly instead of trading with outside companies or countries. This process causes countries to lose important tax revenue, regardless of wealth status (Shah, globalissues.org).
Multinational corporations are not the only ones that partake in tax avoidance, as a matter of fact countries encourage it by participating in tax competition. Tax competition is when countries compete with one another by offering the most affordable or nonexistent amount of taxes possible. They do this to attract the corporations to invest and operate in their country as opposed to anywhere else. The reality of globalization and the fear that companies will go elsewhere if not incentivized made them participate in tax competition in the first place. While this process sounds great for the "winning" country in the short run, it does not pay back in taxes in the long run. At the same time the "losing" countries are not getting business so they have to continue to negotiate with even lower taxes. In the end, it is a lose-lose situation for both sides because they are sacrificing important tax revenue to a multinational corporation with no loyalty to any country. Every country that partakes in this will end up in one direction: down.
To summarize, Globalization did allow corporations to increase profits, but at the same time use new methods of tax avoidance. An universal tax system should exist with globalization to hinder tax avoidance and bring in tax revenue. Corporations have become people via the Citizens United v FEC Supreme Court case. However, unlike people they have the ability to be everywhere to sell, and nowhere to report their profits at the same time according to Joseph Stiglitz of CCPA Monitor. They are loyal to no country, if they find a tax haven or a more clever method of tax avoidance in another country they will use it. Their number one goal is to make the most of profits for themselves and their investors. They could care less if people are left unemployed or if governments don't collect the taxes that the corporations should be paying.
Shah, Anup. "Tax Avoidance and Tax Havens; Undermining Democracy." Globalissues.org. N.p., 7 Jan. 2013. Web. 8 Apr. 2014. < http://www.globalissues.org/article/54/tax-avoidance-and-havens-undermining-democracy#WhatisTaxcompetitionandwhyisitbad.
Brain mapping projects in the US and Europe are exciting developments. Learning more about how the mind works could well be a great leap forward for humanity, helping us to treat psychological conditions and understand each other better; but equally the insights need to be handled responsibly and ethically to avoid them being transformed into tools of manipulation.