The general impression is that the taxation system in the rich countries is by and large equitable and that it is essentially based on the principle of equity. And, therefore, it is generally believed that this system does not let rich to become too rich and the poor to slip down to the bottom of the barrel and remain there for good.

But then It is not only in the poor countries that the gap between the rich and the poor is widening, it seems to be a global phenomenon as according to a path breaking study released by the Helsinki based World Institute For Development Economic Research of the United Nations showed that the richest one alone owned 40 per cent of global assets in the year 2000.

The study says that in contrast the bottom half of the world population owned barely one per cent of global wealth.

The report also finds that those in financial services and the internet sectors predominate among the super rich.

There are many factors which facilitate, despite the so-called equitable taxation system, continued and unhindered accumulation of wealth in a few hands while an expanding sea of people is consigned to perpetual poverty.

One of these factors, the widespread global network of tax havens is said to have undermined even most equitable taxation system facilitating rich to become richer through tax avoidance and evasion.

Tax Justice Network, an anti-tax haven pressure group, suggests that global tax revenue lost to tax havens exceeds $255 billion per annum, although those figures are not widely accepted. Estimates by the OECD suggest that by 2007 capital held offshore amounts to somewhere between $5 trillion and $7 trillion, making up approximately 6-8 per cent of total global investments under management. Of this, approximately $1.4 trillion is estimated to be held in the Cayman Islands alone.

A tax haven is a place where certain taxes are levied at a low rate or not at all. This encourages wealthy individuals and/or firms to establish themselves in areas that would otherwise be overlooked. Different jurisdictions tend to be havens for different types of taxes, and for different categories of people and/or companies.

The use of modern tax havens has gone through several phases of development subsequent to the interwar period. From the 1920s to the 1950s, tax havens were usually used for the avoidance of personal taxation. The terminology was often used with reference to countries to which a person could retire and mitigate their post retirement tax position.

However, from the 1950s onwards, there was significant growth in the use of tax havens by corporate groups to mitigate their global tax burden. This strategy generally relied upon there being a double taxation treaty between a large jurisdiction with a high tax burden (that the company would otherwise be subject to), and a smaller jurisdiction with a low tax burden (which, by structuring the group ownership through the smaller jurisdiction, they could take advantage of the double taxation treaty and pay taxes at the much lower rate).

Although some of these double tax treaties survive, in the 1970s, most major countries began repealing their double taxation treaties with micro-states to prevent corporate tax leakage in this manner.In the early to mid-1980s, most tax havens changed the focus of their legislation to create corporate vehicles which were "ring-fenced" and exempt from local taxation (although they usually could not trade locally either).

These vehicles were usually called "exempt companies" or "International Business Corporations". However, in the late 1990s and early 2000s, the OECD began a series of initiatives aimed at tax havens to curb the abuse of what the OECD referred to as "unfair tax competition".

Under pressure from the OECD, most major tax havens repealed their laws permitting these ring-fenced vehicles to be incorporated, but concurrently they amended their tax laws so that a company which did not actually trade within the jurisdiction would not accrue any local tax liability.

Last week OECD announced the removal of Liberia and the Republic of Marshall Islands from its List of Unco-operative Tax Havens, following the two countries’ commitment to implement a programme to improve transparency and establish effective exchange of information in tax matters.

Liberia and Marshall Islands join 33 other jurisdictions that have made similar commitments in relation to OECD’s work to curb harmful tax practices. Three jurisdictions remain on the OECD List of Unco-operative Tax Havens, published in April 2002: Andorra, Liechtenstein and Monaco.

OECD Secretary-General Angel Gurría welcomed the commitment of the two new entrants and said the OECD would be ready to assist them as they take forward reforms in the tax area. “This is a time of great change in Liberia and Marhsall Islands ,” he said in a statement. “Their commitment to the standards of transparency and effective exchange of information in tax matters will contribute to enhancing their reputation in the international community, which will be beneficial to its long-term development.”

The OECD’s work in favour of transparency and effective exchange of information in tax matters is designed to enable countries to enforce their tax laws fully and fairly. A recent report, “Tax co-operation: Towards a Level Playing Field—2006 Assessment by the Global Forum shows that most jurisdictions have made considerable progress in implementing agreed standards, although further progress is still needed in some.

List of Tax Havens: The following list of Tax havens is based on the OECD list of tax havens 2004 and then adapted to help gain helpful information for the assistance of anyone hoping to become a tax exile.

Albania, Andora, Anguilla, Antigua and Barbuda, Aruba, Bahamas, Baharain. Barbados, Belize, Bermuda, British Virgin Islands, Canary Island, Cayman Island, Cook Islands, Costa Rica, Cyprus, Dominica, Dominican Republic, Gibraltar, Grenada, Guernsey, Isle of man, Jersey, Liechtenstein, Luxembourg, Maldives, Malta, Mauritius, Monaco, Montserrat, Antilles, Niue, Panama, Samoa, San Marino, Seychelles, St. Lucia, St. Kitts and Nevis, St. Vincent and the Grenadines, Switzerland, Tonga, Turks and Caicos, US Virgin Islands and Vanuatu.