Tax havens have a negative impact on the world economy by reducing tax revenue for high-tax countries, leading to tax avoidance and financial instability. Estimates suggest that up to $255 billion is lost annually due to tax havens. Developing countries are particularly affected as they lack the tools to combat tax evasion through offshore companies. The global economy's globalization and loopholes in the tax system have allowed tax havens to thrive, offering lenient tax laws and financial advantages to countries located there.