Offshoring is the relocation of business processes from one country to another; typically an operational process, such as manufacturing or supporting processes, such as accounting. Recently offshoring has been associated with the outsourcing of technical and administrative. The People’s Republic of China emerged as a prominent destination for production offshoring. A tax haven is a state, country, or territory where, on a national level, certain taxes are levied at a very low rate or not at all. It also refers to countries which have a system of financial secrecy in place. Financial secrecy can be used by foreign individuals to circumvent certain taxes such as inheritance tax on money and income tax of the interest on the money on bank account.The Economist has adopted the definition by Geoffrey Colin Powell: “What identifies an area as a tax haven is the existence of a composite tax structure established deliberately to take advantage of and exploit a worldwide demand for opportunities to engage in tax avoidance.” In December 2008 the US Accountability Office regarded that tax havens have no or nominal taxes; lack of effective exchange of tax information with foreign tax authorities and lack of transparency. A 2012 report from the Tax Justice Network estimated that between $21 trillion and $32 trillion is sheltered from taxes in unreported tax havens worldwide. If such wealth earns three per cent annually and such capital gains were taxed at 30 per cent, it would generate between $190 billion and $280 billion in tax revenues, more than any other tax shelter. This estimate included financial assets only, high-net-worth individuals can stash works of art, jewelry, and gold in freeport’s warehouses that serve as repositories for valuables. Geneva, Luxembourg and Singapore all have them.Corporations, in order to achieve effective tax avoidance, use multiple types of tax havens. Three types of tax haven types form a Dutch Sandwich. Primary tax havens: the location where shell companies have obtained rights to collect profits from corporate intellectual property. Semi-tax havens: locations that produce goods for sale outside of their territorial boundaries and have flexible regulations to encourage job growth. Conduit tax havens: locations where income from sales made outside their boundaries, is collected, and then distributed. The statistics indicates that offshore banking is a very sizable activity making up approximately 6–8% of total global investments under management. A more recent study by Gabriel Zucman of the London School of Economics estimated the amount of global cross-border wealth held in tax havens is US$7.6 trillion, of which US$2.46 trillion was held in Switzerland alone which is a conduit tax haven. Roughly 15% of the countries in the world are tax havens that these countries tend to be small, affluent, better governed and tightly regulated. Non-sovereign jurisdictions commonly labeled as tax havens include: Jersey (United Kingdom), Isle of Man (United Kingdom), Bermuda, British Virgin Islands, Cayman Islands and Delaware United States.In the United States foreign nonresidents are not charged various taxes since the Clinton administration the IRS has proposed collecting information on these depositors to share with their home countries as a regulation. These regulations were eventually finalized in April 2012.The following list is consisting of eighty two countries and tax heaven that have financial secrecy. I have included only a few for general relevance. The list includes the Financial Secrecy Index (FSI 2013). Countries with higher FSI have larger influence on world economy.Switzerland (FSI 1765,2), Luxembourg (FSI 1454,4), Hong Kong (FSI 1283,4) Cayman Islands (FSI 1233,5), Singapore (FSI 1216,8), Panama (FSI 489,6), Bermuda (FSI 432,3), United Arab Emirates (Dubai), British Virgin Islands (FSI 385,4), India (FSI 254,5)The advantages of tax havens can be viewed in the following four principal contexts, 1-Personal residency Wealthy individuals from high-tax jurisdictions have sought to relocate themselves in low-tax jurisdictions.2-Corporate residency: Corporate persons can own subsidiary corporations in many countries that allow them to take advantage of the variety of laws. In extreme cases they move their formal corporate headquarters. 3-Asset holding involves utilizing an offshore trust or offshore company, or a trust owning a company. The company or trust will be formed in one tax haven, and will usually be administered and resident in another. 4-Trading and other business activityBusinesses like reinsurance, internet and finance companies are good examples of such activities as these types of companies are service related therefore they do not require any location and labor. Presently same sort of practice is being done in Pakistan. People send money outside of the country, make it appear clean and reinvest through proper channel as mentioned earlier. In the 1970s corporate groups were known to form offshore entities for the purposes of “re-invoicing”.Financial intermediaries are responsible for professional financial services such as mutual funds, banking, life insurance and pensions. Generally the funds are deposited with the intermediary in the low-tax jurisdiction, and the intermediary then lends or invests the money into a high-tax jurisdiction. The Cayman Islands, have nearly $1.1 trillion US Assets under management.In 2010 it was reported that Google uses techniques called the “Double Irish” and “Dutch Sandwich” to reduce its corporate income tax to 2.4%, by funneling its corporate income through Ireland and from there to a shell in the Netherlands where it can be transferred to a “Bermuda Black Hole”, which has no corporate income tax. The company also uses an avoidance structure in Asia called the “Singapore Sling”.Anonymity and bearer shares allow for anonymous ownership and thus have been criticized for facilitating money laundering and tax evasion. In 2012 the Guardian wrote that there are 28 persons as directors for 21,500 companies. Most tax havens have a double monetary control system, which distinguish residents from non-resident as well as foreign currency from the domestic one. It is possible for a foreigner to create a company in a tax haven to trade internationally. Incentives for nations to become tax havens are earning sufficient income for their annual budgets, employing some of the local population and transfer needed skills to the local population. Tax havens accumulate idle cash which is difficult for companies to repatriate. The tax shelter designed to disadvantage the poor. Many tax havens are thought to have connections to fraud, money laundering and terrorist financing.Mossack Fonseca (MF) is providing dedicated services for managing accounts of offshore companies. MF offering are audit, assurance, advisory, actuarial, corporate finance, and legal services, company registrations, tax consultancy, portfolio management and accountancy. Big companies always need service provider whose expertise is authenticated that is why they take chances on authentic diversified known devils of the field and outsource such services so that secrecy could be maintained. The Panama Papers are a leaked set of 11.5 million confidential documents that provide detailed information about more than 214,000 offshore companies listed by the Panamanian corporate service provider MF. Internet security of MF appeared to be outmoded and had serious loopholes that created opportunity for the leak. International Consortium of Investigative Journalists (ICIJ) had already had the leaked data for year. MF seemed to have been running a three-year-old version of Drupal with several known vulnerabilities.The leaked files identified 61 family members and associates of prime ministers, presidents and kings including Prime Minister of Pakistan Nawaz Sharif’s three children, Mariam Nawaz , Hasan Nawaz and Hussain Nawaz are among the over 200 members of the Pakistani elite listed in the Panama Papers as owners of offshore companies in a tax haven. Indian politicians on the list include Shishir Bajoria and Anurag Kejriwal. Other clients included less-senior government officials and their close relatives from over forty different countries.Passports of at least 200 Americans were discovered but no US politicians have been named in the leak that creates an understanding that some institutions desired the US political climate remain intact. Panama is second home to lot of US corporates if any connection is not coming out of it that means we understand how system works.