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Pandora Papers

I bet readers have heard of the Pandora Papers that were leaked a few months back. It’s the latest amongst the “P Papers” (ie. Panama Papers 2016, Paradise Papers 2017) to unmask the shady dealings of the global elite’s network of money laundering, tax evasion and corruption. Here’s the rundown:

Loopholes:

• Organisations and public figures should pay taxes to their native countries.

• However, by setting up shell companies, trusts or licensing at tax havens, they can pay significantly less taxes from their earnings. (ie. tax offshoring)

• A web of companies, beneficiaries and trustees are usually set up to reap the benefits of these tax loopholes.

• For a more in-depth overview on the structures, this video is a good explainer.

• Basically, it’s corporate structuring taken to the extreme to minimise taxes and in some cases, muddle the paper trail (gains from corruption).

It’s estimated that a hefty $7 trillion are tied up in these offshore financial centres.

Tax Havens:

• Tax havens are countries with lower tax rates (and often have more corporate secrecy) than the native country.

• Popular tax havens include the Cayman Islands, Panama and Luxembourg, usually smaller countries with few natural resources.

• So, if these tax havens don’t have much natural resources and still charge so little in taxes, how do they make money?

• They actually gain from the registration fees and work permits from the thousands of shell corporations that they attract. (I know, it’s less ‘international espionage’ and more ‘pencil-pusher’)

• These fees are typically tens of thousands per year, but it would save a company hundreds of millions. 

• The Cayman Islands has no income tax, corporation tax, capital gains tax or inheritance tax, yet always has a budget surplus from these registration fees.

Whilst extreme corporate structuring is technically not illegal, it’s hella shady. Imagine getting paid pennies thinking your company’s revenue is not that high when in fact it’s just unreported domestically. The same applies to finding out that your politicians and public officials are filthy rich while they pretend to care about the people and development. What matters is the intent and to be for the masses, transparency is key.

Before you go...

• Check out Issue #49 where we talked about Inventing the Kraken 🦑 🏴‍☠️
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This series is brought to you by Lee Way (@leewaylau). He will be writing about political & societal issues, history, movies and music on What's Up Wednesday.