The Pandora papers recently published by the ICIJ, a two-year work that is the largest research in the history of journalism exposing a shady economic system that favors the rich and powerful of the world, shows that very little progress has been made to date as to the continuation of opacity to hide wealth.
Despite occasional revelations such as Offshore Leaks (2013), China Leaks (2014), Panama Papers, Bahama Leaks, Football Leaks (2016), Money Island, Malta Files and Paradise Papers (2017), Dubai Papers (2018), FinCen Files (2020) and Open Lux, Pandora Papers (2021) which reveal ways to hide wealth through offshore trusts and companies, progress is substantial but not enough to eliminate this phenomenon.
The issue that arises is that people are getting used to these revelations to the point of sooner or later becoming indifferent, and since each time the goal of these revelations is not achieved which is none other than to stop this phenomenon of tax evasion worldwide and concealment of wealth.
The Pandora Papers consist of 12 million documents from 14 law firms specializing in the creation of corporations in tax havens, an anonymous source, 600 journalists, working non-stop for two years.
In this way, the secrets of 35 former and current heads of state, 300 public officials, 132 billionaires, and tens of thousands of offshore company owners have come and continue to be made public.
Among the 270,000 real beneficiaries of offshore companies that have been identified, there are several lawyers who appear as owners so that the names of the real owners are not known. As mentioned above, public opinion may be dealing with them for a while, but then the system of offshore companies and the ways of tax evasion and concealment of wealth will remain untouched, at least as far as the majority of citizens believe.
Progress in combating this system of offshore companies
The progress that has been made so far is significant but not enough to fully combat this phenomenon. More specifically:
• Banking secrecy ceased to exist in the EU in 2017.
• The automatic exchange of information on bank accounts is a rule of transparency from 2019.
• Many countries make registers with the real owners of companies, in order to eliminate the phenomenon of shop window owners.
• Many Caribbean offshore centers adopt stricter control rules.
• The OECD creates an agreement on a global minimum corporate tax rate.
Obstacles to eliminating the problem
Many obstacles that exist for the complete elimination of the phenomenon of tax evasion and concealment of wealth lie in the following reasons:
• In the personal conduct of the participants in this system involved in this action and includes financial intermediaries, law firms, notaries, bankers, lawyers, home brokers, family offices, and generally other service providers, who when charged deny any responsibility by throwing the blame to their customers, or to the states themselves that leave “loopholes” in their legislation.
• As a result of this ecosystem, some countries are appearing as tax havens to attract specific customers who want to hide wealth. Such countries are Hong Kong (China), Belize, the British Virgin Islands, Cyprus and others that are not blacklisted in the EU tax havens (2017).
• Countries that favor the situation by playing a double game, such as the US pushing whether their interests are served or not, while at the same time maintaining their own tax havens such as Delaware, Alaska, New Hampshire, South Dakota.
• The capital of offshore companies in these areas reaches $ 360 billion, while in tax havens worldwide the assets reach $ 9 trillion.
If you, as a state, want a common global minimum corporate tax rate, the reforms for offshore companies must be universally accepted and implemented by all, otherwise the problem will be perpetuated.
