Articles Tagged with island tax haven

IMG_0081-300x193In his book, Moneyland, Oliver Bullough details how wealthy individuals and large companies take advantage of a long list of loopholes to hide profits and leverage their control over the world. With a combination of geography and demography, Bullough takes readers on a journey of the corrupt practices followed by some of the most influential entities in the world.

Tax havens and lenient laws are part of what makes such an extreme level of corruption possible, and seemingly legal. Known tax havens like the Cayman Islands, Bermuda, and Switzerland have been used by corporations and individuals around the world to hide profits and reduce tax fees for decades. With little to no taxes owed on profits in these locations, tax havens are extremely inviting to the greedy. But how does it work?

The idea is quite simple. For example, a company in the United States merely has to open a subsidiary located in a tax haven to reroute profits and enjoy the more lenient practices of that area. This practice is only made safer for the individuals involved due to the fact that most tax havens have little to no legislation preventing or criminalizing such acts.

tax havenA whistleblower by the name of Rudolf Elmer claimed that during his work as a private banker and internal auditor for the Swiss financial institution, Julius Baer Bank & Trust Company Ltd., he discovered actions that he found to be deceitful when relocated to the Cayman Islands. When Elmer acted as a whistleblower in this situation, instead of being supported in his efforts, he was fired, removed from the financial world, given time in prison, and even suffered a mental breakdown.

Whistleblower is a legal term that signifies anyone who chooses to report a person or organization for illicit activity. A large portion of whistleblowers are insiders and have directly interacted with the company in question as an employee.

Whistleblowers have the right to take legal action in the government’s name while the government may choose to step in at any point of the process to handle the allegations they find particularly detrimental or unlawful. The United States has a set of laws in place that are designed to protect whistleblowers known as the Whistleblower Protection Act, which has been around for over 30 years with the last major update being in 2012.

tax evasionAccording to a list by Oxfam, a charitable organization that works to alleviate global poverty, Bermuda is the worst corporate tax haven in the world. Joining Bermuda on this list are fourteen other tax havens, which include the Cayman Islands and British Virgin Islands. But, what makes Bermuda stand out among the others noted on this list?

Creating The List

Oxfam did not take the creation of this list lightly. In order to determine the tax havens that belonged on the list, Oxfam carefully researched numerous factors, including the presence of exceptionally low or nonexistent corporate tax rates and unfair tax incentives. Oxfam also took into consideration the cooperation, or lack of cooperation, of these tax havens in regards to international regulations designed to combat tax evasion. During its extensive research, Oxfam found that Bermuda and other British territories were among the worst tax havens in the world. This is especially true when considering the United State’s use of these tax havens.

tax havenReports from London have shown that nearly a third of the billionaires located in Britain plan to or have already moved to areas considered tax havens. In addition to this sudden shift, there is also talk of an investigation into political party bankrolling from those that have chosen to relocate, as well as the delay in a vote involving the end of secret company ownership in offshore territories.

According to the Times news, 28 out of the 93 recorded British billionaires have been found through public record to have moved or been in the process of moving to a tax haven within the last decade.

Tax havens are locations in the world in which taxation is extremely light or sometimes even non-existent. Examples of these are the Channel Islands or countries like Switzerland and the United Arab Emirates that pay little to no tax.

paradise papersThe Paradise Papers Offer a Glimpse of Ultra Rich Money Practices

Swirling around in the media and online is a leak of financial documents called The Paradise Papers. Within the terabits of information lies the documented offshore accounts of politicians, celebrities, multinational corporations and even royalty. There is something else buried in the data according to The Gateway—money laundering and tax evasion.

The Trail of Money