Multiple Choice Multiple Answers – PTE Practice Sample 14

Multiple Choice Multiple Answers PTE – Read the passage and answer by selecting all the correct responses. More than one response is correct.

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PTE Multiple Choice Multiple Answers

17. Read the passage and answer the following question.

A tax haven is a state, country or territory where certain taxes are levied at a low rate or not at all, which are used by businesses for tax avoidance and tax evasion. Individuals and/or corporate entities can find it attractive to establish shell subsidiaries or move themselves to areas with reduced or nil taxation levels. This creates a situation of tax competition among governments. Different jurisdictions tend to be havens for different types of taxes and for different categories of people and companies. The central feature of a tax haven is that its laws and other measures can be used to evade or avoid the tax laws or regulations of other jurisdictions. A 2012 report from the Tax Justice Network estimated that between USD $21 trillion and $32 trillion is sheltered from taxes in unreported tax havens worldwide.

Tax havens have been criticized because they often result in the accumulation of idle cash that is expensive and inefficient for companies to repatriate. The tax shelter benefits result in a tax incidence disadvantaging the poor. Many tax havens are thought to have connections to fraud, money laundering and terrorism. While investigations of illegal tax haven abuse have been ongoing, especially in light of the 2015 HSBC files revelations, there have been few convictions.

Question – According to the text which of the following is true about a tax haven?

Options – 

1. Tax haven is often a state or territory within a country
2. Tax havens have a high rate of taxes
3. A tax haven does not necessarily apply to all types of taxes
4. Tax havens are praised for accumulation of cash
5. Some tax havens have nil taxation levels

3, 5

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