Tivot Sandwich: Difference between revisions

== History ==

Following the [[Posolic Wars]], the Grand Republic of [[Salovia]] in 1834 was recognised as an independent and legitimate state. Tivot was a province of this new nation. Thus, Tivot's political and legal systems and economic structure developed in the context of being part of Salovia. Under [[List of Chancellors of Salovia|Grand Chancellors]] [[Mikhail Karanovi]] and (his successor) [[Orev Saloko]], the government of Salovia began rebuilding infrastructure and establishing institutional mechanisms for the functioning of the state. Their policies rebuilt the economy of Salovia. The effect of their policies was felt throughout the nation including in Tivot. Infrastructure such as the Port of Triklov were repaired and expanded. Coupled with trade treaties with nations such as [[Ayaupia]], [[Puntalia]] and [[Lapimuhyo]], Tivot became a hub for Salovian trade with the outside world, developing a reputation as a transshipment centre. In becoming a major transshipment centre, the nation laid the foundations to become a major financial centre in the years to follow.

The [[Auroran Imperial War]] broke out in 1970 and lasted until 1975 between the Bursil Accords and the Rivendale Pact. As part of Salovia (which was part of the Bursil Accords), Tivot benefited from the influx of skilled workers, companies and increased trade relatiowith other Bursil Accords member nations such as [[Great Morstaybishlia]]. Furthermore, most the action took place far from Tivot, allowing it to remain relatively stable and prosperous. After the Auroran Imperial War, the Tivotian Governor [[Eliri Drzevili]] announced the province's intent to hold an independence referendum on their status. Despite Salovia declaring secession to be illegal, the referendum was held on October 23rd, 1975 alongside [[Blueacia]], and on January 1st, 1976, the nation was founded with the backing of Salovia's rival powers [[Ethalria]] and Great Morstaybishlia (despite the fact that they were one same side during the AIW).

Declaring independence allowed Tivot to escape the ravges of the decades-long [[Salovian Civil War]] that ensued shortly after the AIW. In a bid to cement its role as a global financial centre and to disentangle its economic fortunes from the quagmire of Salovia, now-Chief Executive Drzevili, enlisted the help of [[Ita Marama]], an Oan auditing firm to develop the policy mechanisms that would make Tivot attractive to foreign nations. Edwin Ita and Kaha Marama proposed the following policies:

* '''Modernisation''': Tivot had to modernise its taxation, intellectual property (IP) and company legislation to bring it in alignment with Auroran nations such as Great Morstaybishlia.

* '''Liberalisation''': Tivot was to make it as easy as possible for foreigners to start and operate companies in the country. This included lowering the time and costs involved in registering a business, getting an address and opening a bank account among others. Furthermore, corporate taxes were to be lowered and companies would have more discretion over their internal records.

* '''Internationalisation''': Tivot was to establish treaties with other nations making trade and the movement of skilled workers easier and less restrictive. Capital controls were to be lifted or severely curtailed.

* '''Stabilisation''': Tivot was to abandon the Salovian net'a in favour of the [[Kirib]] as legal tender.

These policies laid the groundwork for the Tivot Sandwich. But the full potency of the Tivot Sandwich arose when Tivot joined the [[Auroran Continental Assembly]]. The ACA lowered trade barriers and facilitated the easy movement of people, goods and services. Companies and high net worth individuals looking to lower onshore taxation expenses started looking to tax havens to avoid these taxes.

In the process, two classes of tax havens (more accurately known as offshore financial centres or OFCs) emerged: sink OFCs and conduit OFCs. Sink OFCs were the final destinations for shifted profits because of their highly opaque business practices and virtually non-existent tax rates. Countries such as [[Blueacia]], [[Frorkstolm]] and the [[Necraties]] fulfilled this function. However, because the modern financial system was becoming even more complicated and policymakers were wary of these tax havens, many of them struggled to sign the treaties needed to shift corporate tax liabilities easily.

Thus, Tivot positioned itself as a conduit OFC between onshore tax jurisdictions and sink OFCs. Due to its international reputation and the careful work of building its institutional mechanisms starting with Chief Executive Eliri Dzrevili, Tivot was able to gain the trust needed to enter into corporate tax liability treaties with both onshore and offshore jurisdictions. Tivot developed a highly sophisticated structure that involved taxation, company and IP law to develop the base erosion and profit shifting (BEPS) corporate tax tools that came to be known as the Tivot Sandwich.

Tivot law shares many of the features of taxation, company and IP law described in the previous section (refer to the section on [[Tivot Sandwich#Overview of taxation, company and property law|Overview of taxation, company and property law]] for more information). Tivot's corporate tax rates are some of the lowest in the UNAC and is one of the easiest countries in the UNAC to establish a company. Tivot also protects the privacy of juristic and natural persons, enabling juristic persons to conceal a lot of information about their internal operations, beneficial owners (natural persons who are the ultimate beneficiaries of the company) and financial transactions from the public and foreign governments. Furthermore, the government of Tivot tries to ask as little information from companies as possible.