Key takeaways
- We develop a text-based measure of corporate tax haven activity
- Linguistic analysis of 10-K filings reveals active vs. passive haven use
- "Active Haven" identifies firms that actively exploit haven benefits
- Many firms have haven subsidiaries but do not actively use them for tax planning
- Our measure predicts future tax avoidance better than subsidiary counts
The problem with existing measures
Traditional measures of tax haven use simply count subsidiaries in haven jurisdictions. But having a subsidiary in the Cayman Islands does not mean a firm is aggressively avoiding taxes. The subsidiary might be dormant. It might serve legitimate business purposes.
We needed a way to distinguish firms that actively exploit haven benefits from those that passively hold haven entities.
Our solution
We analyze the language firms use when discussing their haven subsidiaries in SEC filings. Active users describe their haven operations differently than passive holders. The linguistic patterns reveal intent.
Our "Active Haven" measure identifies firms whose disclosure language suggests they are actively using tax havens to reduce their tax burden.
Data access
The Active Haven dataset covers 172,513 firm-years from fiscal years 1993 to 2025 and is updated annually. You can request access on the Data page.
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