Saturday 23rd of October 2021

do not leak...


The revelations in the ICIJ’s 2016 Panama Papers’ data dump shone a light on tax crimes taking place via offshore tax havens – many of which, such as Panama itself, have since tightened rules, including joining international tax transparency efforts.

The 2017 Paradise Papers in turn tended to focus more on companies’ creative tax avoidance – which the OECD is now seeking to address via a global agreement on a minimum corporate tax rate.

The Pandora Papers reveal current rules provide wealthy individuals with mechanisms to purchase property or hide their wealth that aren’t available to other folks.

— Daniel Bunn of US-based think tank Tax Foundation, on how the Pandora Papers differ from previous leaks

The ICIJ’s latest exposé has so far not alleged tax evasion.

“From a pure tax perspective, [these papers are] less serious than the Panama Papers,” says Professor Rita de la Feria, chair in tax law at the University of Leeds. The introduction of financial accounts data sharing between tax authorities and the impact of the leaks themselves have deterred evasion, experts say.

Instead, Pandora has focused on the use of offshore trusts and shell companies by the super-rich and political classes. These legal structures are often created to maintain confidentiality, although they can also be misused for money laundering or corruption purposes.

Hiding their wealth

What the Pandora revelations highlight are inequalities within a tax system that gives the wealthy access to privileges not available to most.

“The biggest thing I take from it [the Pandora Papers] . . . is the current rules provide wealthy individuals with mechanisms to purchase property or hide their wealth that aren’t available to other folks,” says Daniel Bunn of the Tax Foundation, a US-based think-tank.

For example, the revelation that Tony and Cherie Blair saved £312,000 in stamp duty when they bought a British Virgin Islands company that owned a London building from the family of Bahrain’s minister of industry and tourism.

Dan Neidle, tax partner at Clifford Chance, a law firm, says what the Blairs did “was not a loophole” as stamp duty is due only on the sale of real estate itself and not when a company that owns the real estate is sold.

“It’s a policy choice,” he says. “If governments want to change that, they should.”

Is the US falling behind?

Though the net has been closing in on users of tax havens in general, the Pandora Papers make clear that some areas have seen the business grow.

These include the American states of South Dakota, Nevada, Delaware and others which the ICIJ said had “transformed themselves into leaders in the business of peddling financial secrecy”.

The amount of assets estimated to be held by South Dakota’s trust industry alone has quadrupled from $US75.5 billion in 2011 to $US367 billion (about $505 billion) last year. This growth has been fuelled by a lack of disclosure rules compared with other jurisdictions.

In principle, it’s behind the rest of the world in terms of tax transparency.

— Dan Neidle, tax partner at law firm Clifford Chance, on US laws

Since 2014, international rules have led to the automatic exchange of information on financial accounts between tax authorities. The rules, developed by the OECD and known as the Common Reporting Standard, have been signed up to by 110 countries as of last month.

But the US does not participate in the global rules. Instead, it operates its own regulations – known as FATCA (Foreign Account Tax Compliance Act). “The US has a much more limited version of the CRS,” says Neidle. “In principle, it’s behind the rest of the world in terms of tax transparency.”





Whistleblower turned fugitive Edward Snowden tipped his hat to the whistleblowers involved. “The humorous side of this very serious story is that even after two apocalyptic offshore finance/law firm leaks, those industries are still compiling vast databases of ruin, and still secure them with a Post-It Note marked ‘do not leak,'” Snowden tweeted.


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paradise papers...

paradise papers...paradise papers...

The name refers to a leak of 13.4m files. Most of the documents – 6.8m – relate to a law firm and corporate services provider that operated together in 10 jurisdictions under the name Appleby. Last year, the “fiduciary” arm of the business was the subject of a management buyout and it is now called Estera.


There are also details from 19 corporate registries maintained by governments in secrecy jurisdictions – Antigua and Barbuda, Aruba, the Bahamas, Barbados, Bermuda, the Cayman Islands, the Cook Islands, Dominica, Grenada, Labuan, Lebanon, Malta, the Marshall Islands, St Kitts and Nevis, St Lucia, St Vincent, Samoa, Trinidad and Tobago, and Vanuatu.

The papers cover the period from 1950 to 2016.


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