Recent efforts by the Indian government to extradite bank fraudsters and runaway billionaires from Antigua and England are just the tip of a titanic iceberg involving tax havens and corruption.
The London-based Tax Justice Network estimates that the world’s secret offshore wealth is $ 32 trillion.
Governments lose around $ 500 billion in tax revenue each year through offshore bank accounts, according to the advocacy group.
British overseas territories like Jersey and the Cayman Islands help hide ill-gotten wealth from corporate fraudsters, in addition to laundering black money through trusts and shell companies.
Hedge funds then turned this hidden loot into billions of dollars through the manipulation of global stock markets. In addition, presentations in the Panama Papers (11.4 million documents) and Paradise Papers (13.4 million documents), the forensic audit of large corporations and “billionaires” reveal interesting truths.
The modern take on jolly thug Jack Sparrow and his cinematic Pirates of the Caribbean plunder by offering financial services in tax havens to those suffering from the world’s worst disease: bottomless greed.
“Financial services” is an important industry in Caribbean tax havens, outside of tourism.
These tourist tax havens are countries or regions with secret banking practices and without or with minimal taxes ~ no corporate tax, property tax, income tax, inheritance tax. Important tax havens include Cayman Islands, British Virgin Islands, Jersey, Bermuda, Channel Islands, Bahamas, Panama, Dominica, Isle of Man, Nevis, Anguilla, Costa Rica, Belize , Barbados, Mauritius and Luxembourg.
Switzerland’s infamous banking secrecy is matched by countries like England, the United States, Singapore and Germany with strict tax compliance rules for their citizens, but a different tax system for foreigners who may hold money. assets in complete confidentiality.
Hypocritical governments attract dirty money and dubious “billionaires”.
Tellingly, some of the biggest business and political crooks are seeking refuge in the UK.
Clean corporate governance groups say large U.S. multinationals have about $ 1.6 trillion parked overseas. Pfizer, IBM, Walmart, General Electric, Microsoft, Exxon Mobil, Chevron are among the companies making more than $ 4.2 trillion in profits globally, but using tax havens to lower tax rates to around $ 25 , 9% compared to the US legal rate of 35%.
Apple had Ireland as its tax haven, while Goldman Sachs and Nike used Bermuda. “These havens have more than a fiscal impact,” Nicholas Shaxson wrote in an article for the International Monetary Fund.
“They provide an escape from financial regulations, disclosure, criminal liability and more. Since the main business users of tax havens are large financial institutions and multinationals, the system tips the balance against small and medium-sized enterprises, reinforcing monopolization and the danger of financial instability in emerging market economies ”.
Shaxson, author of the book Treasure Islands on tax havens and John Christensen, former economic adviser to the UK Jersey tax haven, argued that tax havens are a curse on their own people ~ a “paradox of poverty in the midst of abundance ”as in the oil-rich Gulf states. The cost of living is very high in most tax havens where government revenue comes mainly from one-off license fees and heavy taxes on imported goods.
Tax Haven The Bahamas has approximately 3,90,000 citizens living primarily in the capital Nassau, where a townhouse costs $ 300,000 and $ 3 million for a single-family residence. Residents pay $ 300 per month for electricity and water in a small apartment, taxi rates average $ 60 (Rs 4,450) per hour, a loaf of $ 6 (Rs 445).
A meal for two costs $ 300 (Rs 22,220) at the Dune restaurant at Nassau’s Ocean Club, the Four Seasons resort made famous in the 2006 James Bond movie Casino Royale.
Measures such as the Common Reporting Standard (CRS) in 2014 from the Organization for Economic Co-operation and Development have helped reduce the wickedness of tax havens.
In July 2019, around 90 countries shared information on 47 million accounts worth around $ 5,000 billion; bank deposits in tax havens have been reduced by 20 to 25 percent.
CRS has loopholes, experts say, as crooks can claim citizenship in tax havens and evade bank transparency laws. But in a “hell-to-heaven paradox,” crooked billionaires live in daily fear of being caught.