
The Panama Papers: how the world’s rich and famous hide their money offshore - petethomas
http://www.theguardian.com/news/2016/apr/03/the-panama-papers-how-the-worlds-rich-and-famous-hide-their-money-offshore
======
dang
[https://hn.algolia.com/?query=Panama%20Papers&sort=byPopular...](https://hn.algolia.com/?query=Panama%20Papers&sort=byPopularity&dateRange=all&type=story&storyText=false&prefix&page=0)

------
nsns
I think all this talk about the legality of using such services misses the
point. It's about legitimacy, especially that of state leaders. While the
western media might try to use it to delegitimize some non-western leaders,
the leak actually works both ways.

Any country leader who'd make a speech to tell her (or his) people she doesn't
care about them or their country, would do nothing illegal, but would probably
loose her power. It's the same here - the leak serves as proof that the
national Elite in many countries is no longer "loyal" to its imagined
community (aka nation).

~~~
neves
Don't forget that the people that profit from selling financial services to
corrupt leaders are so corrupt as them. Even if they speak flawless English
and wear nice clothes.

------
jacknews
Well this is cool.

But notice on the
[https://panamapapers.icij.org/](https://panamapapers.icij.org/) page there is
a "leak to us" button, so we can share information with the journalist
consortium, but no "show me the leaked data" button so they can share with us.

Where do we get the actual leaked data, so we can investigate companies
ourselves, instead of relying on mass-media "analysis"?

And what about the other law firms (this is only the fourth largest,
apparently)? Is it just a coincidence that Putin is implicated in this, the
only leak?

~~~
johansch
They want to derive the maximum amount of exposure, page views and revenues
from the leaked data in the form of web articles with ads, printed news papers
with ads etc. Releasing the the actual data would be counterproductive to
their own financial gains.

Somewhat ironic, I think.

(Yes, some of the 100+ news organizations are ad free, such as the mandatory
tv license-paid state broadcaster/propaganda organ SVT from my country,
Sweden, but they also have their own motives of wanting to control the data.)

~~~
rfrank
The leak contains large amounts of personal information on people who aren't
necessarily guilty of anything illegal, correct? If that's the case, releasing
the full leak comes with some very real ethical concerns.

~~~
1024core
> The leak contains large amounts of personal information on people who aren't
> necessarily guilty of anything illegal, correct?

How do we know? That's just an assumption. It could also be that the leak
contains information on some very powerful people who better not be crossed?

~~~
raphman_
> _" In this trove there are administrative documents that could actually be
> brought to public knowledge, such as records of incorporation, shareholder
> registers or directors or creation of bank accounts. But there is especially
> a lot of personal information, such as private postal and email addresses,
> scans of passports for internal and external correspondences Mossack
> Fonseca, with many private items (such as vacation rentals, electricity
> bills or, more sadly, the discovery of cancer)"._

[https://www.reddit.com/live/wp1fvdxxwb45/updates/02ec05f2-fa...](https://www.reddit.com/live/wp1fvdxxwb45/updates/02ec05f2-fa78-11e5-b94c-0e945010cea9)

------
mbgaxyz
Pot kettle black?

"...most of the UK’s big media organisations shelter assets and cash flows
offshore. Top of the hypocrites in this respect is The Guardian. They put
their assets in the Caymans, and they used a Luxembourg tax shell designed by
PriceWaterhouseCoopers to funnel cash flows beyond the reach of HMRC. "

"Other media organisations using offshore entities include the Huffington Post
– whose journalists criticised Amazon for doing the same. The owners of the
Mail, News UK and The Telegraph also have various offshore tax-efficient
structures."

[http://order-order.com/2016/04/04/media-organisations-
using-...](http://order-order.com/2016/04/04/media-organisations-using-
offshore-havens/)

~~~
stegosaurus
The major issue with tax avoidance schemes is the effect on competition. It's
kind of like the prisoner's dilemma.

If no-one uses them, great.

If everyone uses them, you have a lower effective tax rate and different
policy outcomes to the ones expected, so there might be distortions.

If others use them but you don't, you're at a competitive disadvantage.

An analogy for the everyman - imagine that there's a loophole me and everyone
else in my city could use as individuals to completely avoid tax. If I choose
not to do so, I'm receiving, say, 20-30% less income than I would annually,
putting me at a huge disadvantage when performing normal activities such as
buying a home, say.

I don't think that tax avoidance is immoral, I do think it should be fixed
because of the distortion (favouring large businesses, which already generally
have advantages due to scale).

It's a bit like how one can be a marxist whilst also choosing to own private
property. You can't exist without mimicing society to some extent.

~~~
chaosmonkey
The question is are these companies doing anything illegal?

------
skylan_q
As mentioned by another poster (who's comment is now dead?)

 _How is this different than when Apple, Microsoft, Cisco, Oracle, HP and
Google "hide" their money offshore in places like Ireland and the Cayman
Islands, which helps them avoid repatriating their profits overseas and paying
taxes on them?_

It isn't. The point of this is that Putin is doing it.

~~~
nicktelford
The difference is that those companies were/are exploiting various loopholes
in laws across many countries to avoid paying the tax they ordinarily would.
Immoral? Sure. Illegal? No.

I'm no tax professional, but it sounds like this leak is about a large number
of wealthy people actively _evading_ tax, by hiding their assets/source of
income and other shady things. This is very illegal, and if true, I imagine
some of these people can and will be prosecuted for it.

Tax _avoidance_ is legal, tax _evasion_ isn't.

~~~
aantix
Not sure I'm seeing a difference..

~~~
iand
When you put your money into a structured pension plan for your retirement
then it's tax avoidance since you are avoiding paying the tax you normally
would if you invested it in some other way. Tax evasion is where you break the
law by hiding money that should be taxed. Quite a big difference.

~~~
fizzbatter
I think a lot of people (myself included) tend to focus on the "how" rather
than the "why".

Presumably, big corporations are not only avoiding tax via legal means, but
they are creating these legal means to avoid tax. Why do it illegally, when
you can bribe/buy politicians, who then pass laws and allow you to avoid all
the tax you want.

It could be 100% legal _(not bribery specifically, but campaign financing for
example)_ , but i don't think most people are really okay with it.

I'm perfectly okay with someone finding a legal loophole, i am not okay with
them blocking said loophole, or introducing new ones.

~~~
TheOtherHobbes
This is, notoriously, how tax avoidance works in the UK. There's a revolving
door between the big accountancy firms that work out tax avoidance schemes,
HMRC, which is the UK's IRS, and policy desk's in the Treasury, which define
tax policy.

HMRC has been notoriously lax in enforcing and collecting tax nominally owed
by the largest corporations - most recently Google, which "negotiated" a
payment of £130m in back taxes due on £4.6bn in sales.

The details of the "negotiation" have been kept confidential, so we have no
way of knowing how they were calculated.

------
sievebrain
I suspect this will end up fizzling out and not resulting in very much.

From the Guardian articles it's becoming clearer that Mossack Fonseca is not
some sort of mafioso outfit. Even the Guardian's own coverage has to admit
that they do have compliance staff, do perform due diligence and do report
things to the authorities. And they did close down operations when they got
wind of illegal doings. So any stories have to become arguments about specific
cases and debates about whether they could have done more in those cases,
rather than the more juicy story they clearly want, implying that MF is some
sort of criminal nexus that is being taken down by the journalistic
establishment.

If we look at the Swiss banking leak from a few years ago, there were
thousands of account details leaked to the UK government which assigned
hundreds of tax officers to investigate them. And it turned out that about two
thirds of them had paid exactly the right amount of tax all along. Of the
rest, actually proving criminal intent turned out to be impossible, so of the
original 1000+ account holders, only one case was ever actually taken to
court. The others were cleared up through fines. The resulting amount of
revenue was trivial at only £135 million, probably the costs of the
investigation itself consumed most of that. This wasn't UK specific, other
countries also ended up finding the data was useless for prosecutions.

The same was true of another case, when the Swiss authorities agreed to start
sending tax information to the UK. The government thought it was in for a
windfall and wrote the expected amounts into the budget. Red faces followed
when the actual amount of unpaid tax turned out to be much lower than hoped
for.

Maybe the Iceland angle will result in a few heads rolling, who knows, but I'm
willing to bet that most of these revelations end up having very little
impact: the worst cases are all in places where the local law enforcement is
too weak to prosecute presidents and other heads of state for corruption.

~~~
typon
I think you're downplaying this more than you should. I got a very different
impression listening to Nicholas Shaxson (author of [1]) on the BBC. Most if
not all the world leaders involved in this leak are VERY likely trying to hide
personal money from their own country, that alone is a huge deal.

[1] [http://www.amazon.com/Treasure-Islands-Uncovering-
Offshore-B...](http://www.amazon.com/Treasure-Islands-Uncovering-Offshore-
Banking/dp/0230341721)).

~~~
branchless
Exactly, why is Cameron's holding offshore stuff? Now he's dead and Cameron
has picked up his assets, no doubt having avoided inheritance tax, is he
holding these now?

Why do normal people pay these taxes yet these guys do not?

\-----

to the poster below as HN throttle messages when UK corruption is raised:

I think he was mocking the UK's corruption as law.

The last part is a nod to Private Eye, the only remaining free press in the
UK.

~~~
deepnet
Re: Cameron Sr & Blairmore holdings use of the Panama firm.

All of this is a perfectly legal tax avoidance scheme for the rich.

The company, legitimately, never paid a penny in UK taxes because it was run
by various Bahama Islanders & decision making was done in Switzerland at a ski
resort.

The Guardian article suggests there is evidence that the decisions & meetings
were held in the UK - if that is true then Cameron Sr. illegally evaded
millions in UK taxes.

According to the Guardian, David Cameron has answered these claims by stating:
'This is family business'.

Many will recognise this classic rejoinder from the Godfather movies.

Now we are told the firm is being run from Ireland, where Google and Facebook
were working the, perfectly legal, 'Dutch Irish Sandwich' tax avoidance scheme
- that David Cameron rightly criticised and both tech firms apologised and
paid up.

So once again this is all perfectly legal.

Perhaps a bit hypocrital given Cameron's 'tough' stance on tax avoidance and
trying to put the blame on comedian Jimmy Carr.

Of course, as before, if decisons were still being made in the UK, then the
company would owe many millions in UK taxes and fines for evasion - but no-one
is suggesting that.

Jimmy obviously should have used the Cameron Family firm.

The, probably perfectly legal, tax avoidance scheme for the super rich is
called Blairmore Holdings.

It is named after the ancestral Cameron family estate which recieves tons of
money from Europe simply for the amount of land it contains.

All perfectly legal, a sort of welfare for the gentry.

If this all paints a picture of corrupt toffee nosed twits spouting lies about
the poor while filling their offshore coffers then...

shurely shome mistake.

David Cameron is fully expected to give back the millions he inherited from
all these decades of tax avoidance - _cough_ or not.

[http://www.theguardian.com/news/2016/apr/04/panama-papers-
da...](http://www.theguardian.com/news/2016/apr/04/panama-papers-david-
cameron-father-tax-bahamas)

/s

~~~
Tepix
If it's ethically questionable then that's a good reason to publish this
information, especially when politicians are involved.

~~~
deepnet
I am editing this to a sarcasm tag and of course I agree, if he doesn't resign
tomorrow then parliament is a poor joke.

Which is of course is probably also a joke, _lols_ & _nervously resumes
studying UK libel laws_

------
ttflee
These keywords have been censored in Chinese microblog services, along with
all news mentioning Panama Papers removed, due to obvious reasons.

------
jamisteven
Nobody from the US mentioned? This doc was definitely scrubbed.

~~~
skylan_q
No, it was created by George Soros with the help of some US institutions.

~~~
ghrifter
I think its probably a hit job to smear Putin once again, especially because
of rising conflicts in Azeribaijan and Armenia.

"Big Leak of Data" but doesnt actually make the data public. I mean,
seriously???

~~~
mercurial
> I think its probably a hit job to smear Putin once again

I thought "smear" was the same as "defame". If he is actually tax-evading and
stealing Russia's money, it's, at worst, exposing some of the skeletons in his
closet.

------
vijayr
Does anyone know how such a thing was pulled off? I mean, it is not like
taking a paper clip from office. This is mind boggling amount of information -
how can someone copy so much info _and_ send it to a newspaper etc without
setting off red flags? This is incredible.

~~~
zorked
A single HDD worth of content isn't a mind boggling amount of information.

~~~
vijayr
True, but collecting it isn't (unless it was all in one place, which I doubt).
And taking it out of the firm isn't (unless they have zero security).

~~~
ptaipale
It could be quite accessible by someone like the IT and e-mail administrator.

------
branchless
Tax avoidance in the UK is a big problem. We can't pay for our infrastructure
because of these guys avoiding tax.

But it's not just working people in the UK - working people all over the world
are being denied services thanks to UK tax havens.

Who is causing more problems for working people? Sparse terrorist attacks or
day-in, year out tax avoidance depleting spending and raising land costs?

~~~
sievebrain
_Tax avoidance in the UK is a big problem. We can 't pay for our
infrastructure because of these guys avoiding tax._

Tax avoidance is undefinable so this sort of statement is meaningless. The UK
can't pay for its infrastructure due to a massive structural deficit. Even if
you start defining legal behaviour as immoral and try to grab more money from
targeted companies or individuals, the amounts of revenue collected would be
trivial compared to the size of the problem - and it'd be a one off hit. Once
a country demonstrates that the rule of law is optional, investors start to
flee. And that's the sort of avoidance that you can't tackle with any law.

~~~
branchless
The exact line drawn between tax efficiency and immoral tax avoidance is hard
to pin-point, but I'm certain that I know a bunch of crooks filling their
boots when I see it.

These off-shore companies are not fair. Do your work, pay tax on it like the
rest of us.

As for the rule of law being optional. I pay my taxes yet these guys choose
not to by using loop-holes. That is not the spirit of the law.

I reject this kind of argument, it's very popular but it doesn't hold any
weight with me.

They could stop this kind of rubbish but they don't want to because people
like Cameron are using it.

Let's have land value tax now and stop this international hide and seek.

We don't want these "investors" in the UK. UK banking funnels dirty money into
property which ramps the price for workers. Banks they "help" by lending us
insane amounts which absorb all our income (and require ultra low rates
forever). None of this is of any help to the normal working person who is
doing stuff of actual use that makes the world turn, like food production,
doctors, etc. These guys are taking and giving nothing back. Tax them!

~~~
sievebrain
"I know it when I see it" is not a basis for a legal system.

Look at it like this. You live in a country, you work there. Now imagine you
go on holiday to a sunny destination. Whilst there, you open your work email
and reply to a few mails.

If you are then arrested by the local police and told you are doing business
in that country without paying taxes, and thus must now pay a big fine or be
prosecuted for tax avoidance, would you be happy about that? I think not.

What if the locals didn't like your kind of people and thought your treatment
was totally fair? "I know crime when I see it", they say. Would you roll over
and meekly accept it?

No, you wouldn't. You'd extricate yourself as quickly as possible, and then
leave and never go back. And you'd tell all your friends to stay the hell away
from that banana republic.

Well, that behaviour applies to companies too. If you want them to employ
people in your economy, there must be clear rules and those rules must be
followed predictably.

I quite agree that interest rates are being artificially kept far too low
around the world and this is driving property bubbles in places like Manhattan
and New York. The solution to that is not to tax people who are just trying to
shield themselves from inflation. The solution is to abolish central banks.

~~~
branchless
They lobby to add loopholes to the legal system because the banks control our
"democracy".

Both major parties are captured by the banks. We have first-past-the-post
system to keep it 2 party.

We need people to actually put their foot down.

I'm happy for every single one of these parasites to leave and never come
back. The wealth of the UK is _not_ in these guys with their paper it's in
people doing actual work. If we need to issue more currency to facilitate this
then fine, it's fiat.

Their paper is _not_ facilitating work. We have smart people who are getting
up in the morning and can do things. Their paper in fact allows them to claim
a slice of the working man's labour.

I've seen these arguments on "what if". These guys are guilty, we all know it.
We need tax payments to have a democracy, it's these guys who are breaking the
law and undermining our country.

We do not need these shysters.

~~~
sievebrain
The UK is not a two party system. Right now the dominant parties in the UK
Parliament are the Conservatives, Labour and the SNP. The previous government
was a coalition with the Lib Dems.

The banks do not control democracy. Governments control banks. I know this may
be painful to hear, but just go _talk_ to people who work in banking about how
many of their banks staff work in "compliance" i.e. implementing the wishes of
all the various government agencies. You will be amazed at how many thousands
of people (in some big banks, tens of thousands) do _nothing_ all day but
implement various regulations.

 _I 'm happy for every single one of these parasites to leave and never come
back._

You say that now, but you wouldn't be. The UK has a very narrow tax base. That
means most tax is paid by a tiny number of people.

[http://www.economist.com/news/leaders/21618784-taxes-are-
bes...](http://www.economist.com/news/leaders/21618784-taxes-are-best-raised-
broad-base-many-countries-it-worryingly-narrow-too-reliant)

In the UK the top 1% of earners pay about 30% of all income tax. In the USA
the statistic is even worse, 1% of all earners pay 50% of the income tax.
These figures have been going up over time.

In short, the government is paid for by ever fewer people, who pay ever more
tax. This makes countries very vulnerable to them just leaving. That's the
underlying reason why the British government fights so hard to defend the
city, and why Osborne was willing to take the political hit of reducing
corporation tax in his last budget. If the big earners leave, then any chance
of ending austerity within the next 20 years is gone for good. The UK would
need to start doing actual, serious austerity - like shutting down large parts
of the NHS.

 _If we need to issue more currency to facilitate this then fine, it 's fiat._

All that does is tax people through inflation instead of direct payments. The
UK has been there before, in the 1970's. It resulted in the country going to
the IMF for a bailout, Greece style. If you think people buying houses just to
protect their wealth is a big problem now, a few years of trying to fund a
massive deficit through money printing would show you what's truly possible
when people get desperate.

 _These guys are guilty, we all know it._

That's right. Burn the witches. Worry about the consequences later.

~~~
branchless
These people are deriving enormous economic rent. Many land owners are
subsidised.

The UK works by enough people getting up to provide food, education, medicine
etc, not due to paper circulating.

How are 1% of people providing 30% of "value" to the UK each day? They don't.
They are using their paper claim to claim the labour done by others.

The USA has the same problem.

Let's flush these parasites out.

~~~
ptaipale
Slogans, inciting hate. That is no basis for healthy economic policy.

------
return0
> how the world’s rich and famous hide their money offshore

It shouldn't be just the rich and famous. These schemes don't cost much. I'm
sure many internet entrepreneurs use them, because they 're easy to setup and
to do accounting (plus low taxes, ain't that sweet?). People have already
stopped acting surprised when they read about big corp. dodging taxes. We live
in a financially globalized world, but taxation has not been globalized. The
main issue here is whether the companies are laundering money or used for
illegal purposes. The tax evasion issue is too hard to solve with data
exchange (which now exists). These people are always going to be finding new
ways to avoid taxes. Perhaps governments should start acting smarter, like
moving more to indirect taxation.

Perhaps if this "leak" had happened a few years ago, when panama was still a
tax haven it would have some real meat. Right now it seems like it will be
used to divert attention.

------
sjreese
Well team, we now know what DAVOS ( World Economic Forum ) is all about, cover
for tax avoidance or evasion and a collection of customers for Mossack Fonseca
LLC - Our job now is to see how much economic harm has been done by them not
paying their fair share of taxes. (think Flint Water, EPA Supper Fund, and
Higher Education fund etc. ) Based on this claw-backs of all or part of the
taxes. And for Mossack Fonseca ( it has now to be part of the FCPA regulation
with full reporting requirements to the CCB/ECB and the IMF ) - Without
investment in people, innovation is cut off and people revert to the most
primordial jobs and actions - we can have better with real education and
distributed know-how where people work for the betterment for humankind.

------
andreygrehov
The government structures are completely broken from the inside out. We badly
need a disruption in this sector. Digitally decentralized democracy,
blockchain government, ethereum-based economy! Not sure. These are random
thoughts, but I would love to see at least some baby steps towards this
direction. Not an expert on this topic, but I can see there are potential
opportunities for the world as a whole and, what's most important, its
economy. I'm sure there is an emerging field coming soon around this niche.
Most likely, it's just a matter of time.

~~~
drjesusphd
The internet does make direct democracy more feasible. One can engage public
libraries to ensure everyone has internet access.

This would need to be checked and balanced, but it effectively makes lower
houses (House of Representatives, for example) obsolete.

------
known
Govt can do nothing due to
[https://en.wikipedia.org/wiki/Stockholm_syndrome](https://en.wikipedia.org/wiki/Stockholm_syndrome)

------
Swinx43
Am I the only one to find the reporting on this to be rather one sided? Sure
we all know Putin is a shady character to say the least, but none in the US or
the UK being directly reported on? Germany? France? Instead we get a token
gesture in the way of Iceland's PM being implicated.

The Guardian is losing a hell of a lot of credibility in my opinion for having
this biased view being published.

I say make all the documents available to the entire world. That is the only
way it will be less media propaganda and more a true leak.

~~~
deepnet
[http://www.theguardian.com/news/2016/apr/04/panama-papers-
da...](http://www.theguardian.com/news/2016/apr/04/panama-papers-david-
cameron-father-tax-bahamas)

The Guardian reports the UK Prime Minister's father used the firm.

~~~
Swinx43
Yes I saw that however you cannot have the mention of his father be seen as
adequate reporting on the misdeeds of the elite.

~~~
deepnet
Yes Cameron answered all allegations regarding this in 2009 so it will make
him look tough - storm in a teacup.

Greenwald cites this tweet as evidence of no US or Israel links
[https://twitter.com/adamjohnsonNYC/status/716718478577823744](https://twitter.com/adamjohnsonNYC/status/716718478577823744)

captured from :
[https://panamapapers.icij.org/the_power_players/](https://panamapapers.icij.org/the_power_players/)

unclear teaser denial by icij chief :
[https://twitter.com/mathewi/status/716771686482202625](https://twitter.com/mathewi/status/716771686482202625)

* Greenwald [https://theintercept.com/2016/04/04/a-key-similarity-between...](https://theintercept.com/2016/04/04/a-key-similarity-between-snowden-leak-and-panamapapers-scandal-is-whats-been-legalized/)

------
myth_drannon
And nothing will happen to them. In Canada the rich get an amnesty and just
have to repay some taxes.

[http://www.cbc.ca/news/business/canada-revenue-kpmg-
secret-a...](http://www.cbc.ca/news/business/canada-revenue-kpmg-secret-
amnesty-1.3479594)

And they mention all these dictators. Why on earth Putin & Co will try to
evade taxes and hide his money? Putin owns Russia, he is the taxman and the
hangman. He doesn't have to hide anything.

~~~
skylan_q
_Why on earth Putin & Co will try to evade taxes and hide his money?_

Why would the anti-russia media focus on one powerful rich person as being
bad?

Gee, I wonder...

~~~
mercurial
Putin's record speaks for itself, really.

~~~
tdkl
His record of not funding Arab militants to overthrow country leaders in the
Middle East in the last decade speaks for itself as well.

~~~
mercurial
I'm not sure to what leader you're thinking about. If you're thinking about
the US, you probably mean Syria, in which case I'll need a lot of convincing
that events down there would have evolved differently without US involvement,
considering the agendas of the local players.

------
olegious
I'm surprised there is no American figures on the list. If some don't appear
as more info is released, I'll seriously question the motivations behind this
leak.

~~~
mc32
Let's say it is biased, does it make it any less true these people used shell
companies to obfuscate their holdings? Or, are you saying this behavior is
okay and in which case it would not matter?

If you look more carefully it does list some less known Americans.

~~~
ab5tract
If the leaked documents implicate important US figures, but the reporting of
the leaks do not mention them, then the public will interpret that as "see, US
figures are not engaging in this activity!".

In other words, the reporting of this leak can be used to shame / reputation
smack anyone who is on the current Western hit list while masking that
behavior for anyone that the Western media outlets want to protect.

~~~
mc32
Yes, that's one take. Another take is exposing some is better than exposing
none.

This is like saying, hey the news mainly shows when white cops beat up on
black suspects, but it doesn't much show when white cops beat up on white
suspects, (or any other combination) so they should not show any.

------
calebm
Anyone know how this tax sheltering works? The article mentioned "One leaked
memorandum from a partner of Mossack Fonseca said: 'Ninety-five per cent of
our work coincidentally consists in selling vehicles to avoid taxes.'" That
would lead me to believe the "vehicle" for transferring wealth offshore might
be selling vehicles - like selling yachts? Just a guess though.

~~~
sievebrain
"Vehicle" in this context just means legal entity. It's the jargon of the
space, it doesn't mean a mode of transport.

The principle of offshore tax shelters is very simple. Countries tax activity
that happens in their jurisdiction. Only America tries to tax activity that
happens _outside_ of America, and it's attempts to do so have caused huge
problems for Americans everywhere (whilst raising trivial amounts of revenue).
All other countries recognise that legitimate taxation is inherently region
specific: a country that raises taxes from other countries is more properly
called an empire.

So countries tax things that happen inside their borders, and countries can
set tax rates independently, and the world is full of small countries that
don't require much revenue to operate. Hence, if you can shift your business
activities from a high tax jurisdiction to a low tax jurisdiction, you can
legally pay the lower rates of tax.

Essentially all discussion of tax "avoidance" you may encounter revolves
around the inherent difficulty of figuring out where a business actually _is_.
For a person it's easy. A person is where their body is, and simply counting
days spent in a country is sufficient to decide on tax residency. For a
company it is not so easy because a company can do things in many places
simultaneously. The rules that try to resolve this conundrum are extremely
vague and thus, easily gamed.

The case of the UK PM's father is instructive. His company had most of its
meetings outside of the UK. This allowed them to argue that it wasn't a
British company and thus shouldn't pay British taxes. If the British tax
collectors want some of that revenue they'd need to argue that actually the
business _was_ done in the UK, really. That's a tricky argument.

In the case of companies like Apple or Google, they set things up so their
business is done in Ireland. They do this because the Irish people have
repeatedly opted to allow very low (effectively zero) rates of corporation tax
in order to attract skilled employment to a part of the world that would
otherwise be fairly unattractive. Whilst technically Irish corporation taxes
are not zero, their rules define the location of a business differently to
some other countries, which means arrangements like the Double Irish become
possible and that allows for moving profit out of Ireland essentially untaxed.
The Irish people know this and allow it, because it has been a very powerful
strategy for them and has made Dublin a business center of Europe. Some other
countries like to complain about this, stating it's unfair competition, but
all countries compete to attract businesses in various ways - often with
direct subsidies rather than low tax rates. So their complaints ring somewhat
hollow.

In practice the money these big companies stash in the Bahamas will eventually
get taxed anyway, because taxes apply when the money moves, and eventually
that money will move. Probably back into the USA if/when a 'tax holiday'
becomes politically acceptable.

~~~
tomp
You're a bit wrong in the beginning. Most countries tax activity that happens
_outside_ , but almost all only do it for their residents (UK is an exception,
it doesn't even tax it's residents, if they're foreign born). Only the US (and
another two or so third world countries) attempts to tax its citizens for all
activity even if neither the citizen nor the activity is in the US.

~~~
sievebrain
Yes, sorry, I was talking about corporate taxation. Yes if you live in a
country then all of your activity is assumed to have 'happened' in that
country even if the money was raised abroad. But that's easy to enforce, as
you are physically in their jurisdiction.

------
lordnacho
Why are there sovereigns listed? If you have your own country, and it's not
known for the rule of law, why do you need a shell company in Panama? Aren't
you above the law?

~~~
ianferrel
My guess is that people who currently have their own country that's not known
for the rule of law want an escape hatch with assets that _are_ secured by the
rule of law, in case it turns out that in the future, their country is had by
someone else.

------
bitmapbrother
The hypocrisy of these politicians attacking tech companies for not paying
more tax all the while they're using offshore tax havens to hide their money.

------
mcbrown
Without more context, the information here is titillating but not ultimately
all that useful.

Let's generalize the content so you can see what I mean:

"A massive trove of documents was just leaked from a law firm that helps
companies and individuals create and operate shell companies in [jurisdiction
X]. We don't know what those shell companies are used for, but they could be
used for wrongdoing! And this law firm was suspiciously focused on protecting
its clients' identities, which further suggests wrongdoing."

Jurisdiction X in this case in Panama. Ok, it sounds dubious to us 'Muricans.

What if jurisdiction X was Delaware? Would you think the law firm was setting
up shell companies for "wrongdoing", or because starting and operating a
business is complicated and there are a variety of practical reasons to base
your corporate in entities in Delaware rather than (say) Maine? Would you
think the law firm is protecting its clients identities because of an effort
to conduct fraud, or because law firms generally err on the side of preserving
the sanctity of attorney-client privilege whenever possible?

Now let's say Jurisdiction X is Ireland. Are the companies that use Irish
shell companies engaged in wrongdoing? Or are they responding to the bizarre
and complicated world of international regulation and taxation as any rational
actor would? Certainly secrecy is not the goal - everyone, including the IRS,
knows everything about how e.g. Apple uses Irish entities to conduct business.

Now let's say Jurisdiction X is Cyprus. Are the shell companies for tax
avoidance in the home country, or for the reasonable avoidance of double-
taxation? One reason investment firms use structures based in Cyprus (or the
Caymans, or BVI, or Luxembourg) is that these countries have mutual tax
treaties with most Western nations, while the US does not. Those tax treaties
ensure that the investor will end up paying taxes only in their own domicile,
not the nation they invest in AND their own domicile. For US persons investing
in (say) Poland through a Cyprus entity, they end up paying their full slate
US taxes (NOT avoiding them - in fact they usually pay higher US taxes than
they otherwise would, because for technical reasons the Cyprus blocker often
results in paying ordinary income tax rates on what would otherwise be treated
as capital gains) but they avoid having to pay BOTH Polish taxes AND US taxes.
This is akin to the reasons why many/most private US businesses are set up as
pass-through entities rather than corporations - avoiding double taxation is
not the same as dodging taxes.

 __*

I'm not an expert on Panama, or international tax for that matter - I just
have some experience dealing with these issues. So I can't say for sure in
what specific purposes using a Panama entity is equivalent to using a Delaware
entity or a Cyprus entity, vs. a blatant attempt to dodge taxes.

All I know is that, from my own experience, there is a huge gap between the
public PERCEIVED reasons why companies and individuals establish overseas
shell corporations (tax avoidance! money laundering! bribery!) and the ACTUAL
reasons they do so (procedural efficiency, clear legal rules, full payment of
taxes but not OVERpayment of taxes, etc.).

------
jedberg
An interesting take from a commenter on my Facebook feed:

"It's all good. Taxation is stealing, hiding wealth in off shore accounts is
the only recourse left to the little man against large government greed."

~~~
pvh
This is why Facebook recently added a variety of new ways to illustrate your
disappointment on posts.

~~~
cylinder
Curiously they left off "rolleyes"

