Paradise Papers: tax avoidance by the world's rich and famous

06 November 2017

A huge new leak of financial documents has revealed how the powerful and ultra-wealthy, including the private estate of Britain's Queen Elizabeth II and a host of Indian entities, secretly invest vast amounts in offshore tax havens, media reports say.

The details come from a leak of 13.4 million files on Sunday that expose the global environments in which tax abuses can thrive - and the complex and seemingly artificial ways the wealthiest corporations can legally protect their wealth.

The material, which has come from two offshore service providers and the company registries of 19 tax havens, was obtained by the German newspaper Süddeutsche Zeitung and shared by the International Consortium of Investigative Journalists (ICIJ) with 100 other media organisations, including The Guardian, the BBC, The New York Times and The Indian Express.

The cache of 13.4 million documents, dubbed the ''Paradise Papers'', involves two firms - Appleby Mauritius, which is actually based in Bermuda, and Singapore's Asiaciti Trust - which help the global rich to move their money to 19 tax havens across the world.

The Paradise Papers have tumbled out 18 months after Panama Papers. Both sets of data were obtained by German newspaper Süddeutsche Zeitung and were investigated by the ICIJ.

The bulk of the records investigated are from Bermuda law firm Appleby. Although not a tax advisor, this 119-year-old company is a leading member of the global network of lawyers, accountants, bankers and other operatives who set up offshore companies and manage bank accounts for clients to do one or a combination of the following - evade taxes, manage real estate assets, open escrow accounts, purchase airplanes and yachts paying low tax rates, or use offshore vehicles to move millions across the globe.

Setting up offshore entities for corporate restructuring or expansion may not be illegal but it raises a crucial issue - how firms such as Appleby help MNCs exploit loopholes in law to avoid legitimate taxes in their country.

The Paradise Papers open the door for regulatory bodies to investigate and ascertain the legitimacy of these offshore transactions.

Some of the revelations include millions of pounds from Queen Elizabeth II's private estate that has been invested in a Cayman Islands fund and some of her money that went to a retailer accused of exploiting poor families and vulnerable people.

It details extensive offshore dealings by US President Donald Trump's cabinet members, advisers and donors, including substantial payments from a firm co-owned by Russian President Vladimir Putin's son-in-law to the shipping group of the US Commerce Secretary, Wilbur Ross.

The leak shows how social media giants Twitter and Facebook received millions in investments that can be traced back to Russian state financial institutions along with aggressive tax avoidance by multinational corporations, including Nike and Apple.

It also includes information about a tax-avoiding Cayman Islands trust managed by the Canadian Prime Minister Justin Trudeau's chief wealth manager.

The leak also shows how some of the biggest names in the film and TV industries protect their wealth with an array of offshore schemes and the complex offshore webs used by two Russian billionaires to buy stakes in Arsenal and Everton football clubs.

The disclosures will put pressure on world leaders, including Trump and British Prime Minister Theresa May as well as India's Prime Minister Narendra Modi, who have pledged to curb aggressive tax avoidance schemes.

The publication of this investigation, for which more than 380 journalists have spent a year combing through data that stretches back 70 years, comes at a time of growing global income inequality.

Offshore finance is about a place outside of one's own nation's regulations to which companies or individuals can reroute money, assets or profits to take advantage of lower taxes.

These jurisdictions are known as tax havens to the layman, or the offshore financial centres (OFCs) to the industry. They are generally stable, secretive and reliable, often small islands but not exclusively so, and can vary on how rigorously they carry out checks on wrongdoing.

(See: India ranks 19th on Paradise Papers list with 714 names)

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