Tax Heaven and Recent Panama Papers Data Leak

News Taxation

Business Mantra: Faridabad

Government in few countries make their own taxation structure at a very low level or even in few cases keep the tax rate at zero or nearest to zero level. This is being done willingly to attract individuals and companies from other countries with higher taxation rate, to make their investments. Many companies move their Head Offices to these countries with extremely low tax structure.

These countries are termed as Tax Heaven.

Many of these countries promise not to reveal the names of individuals or companies keeping their investments in Tax Heaven.

So all the people who want to escape or hide their wealth from the people or governments of their own countries take their wealth to these Tax Heavens. They also want rebate tax on earning this wealth and to escape from the comparatively stringent laws of their home land.

People who keep their money in these Tax Heavens generally are superrich businessmen, big shot politicians, even Prime Ministers and Presidents of many countries and top sportspersons and cinema stars.

Most famous Tax Heaven countries are Switzerland, Luxembourg, Hongkong, Cayman Islands, Singapore, Lebanon and Germany etc.

U.S has always asked other countries of the World to disclose details of investments and transactions of American people in foreign countries but U.S itself is becoming a Tax Heaven and recent Panama Papers Leakage of Data has proved it beyond doubt.

The companies in these Tax Heaven act as Shell companies or trust to keep wealth of people or companies from foreign land. There these companies perform everything in a legal way, complying with all the legal requirement of those Tax Heaven countries. So in a way it may be termed as tax planning not tax evasion but the super rich people and politicians who take money to these countries generally do not disclose their wealth/ earning in their home countries and do not pay tax on it and their source of wealth/ earning is also not disclosed. In this way it is treated as a fraud in their home country from where the money flows to Tax Heaven countries.

The case of Panama Papers in which 2.6 TB of data containing confidential documents has been leaked and the leaked document show that elite class of politicians, players, cinema-stars have kept their undisclosed wealth with Panama Papers. A Panama based law firm M/S Mossack Fonseca has helped these politicians to shell their assets and the same firm has leaked this information to International Consortium of Investigative Journalist, big short leaders like Vladimir Putin (Russian president), Xi Jinping and relatives, former Chinese premier Li Peng and Nawaz Sharif.

All the politicians are saying that it has been done by U.S agencies with the view to de-stabilize governments in Russia and China but one thing is very clear that corruption is deep rooted everywhere in the world and countries like U.S want to lead the world with double standard foreign policy as no action has been initiated against any of the U.S firms keeping investments of foreign land as Tax Heaven.

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