Off Shore Tax Shelters Explained

Secrecy creates an environment where
fraud, tax evasion, money laundering and other forms of corruption thrive.

TAX HAVENS - OFFSHORING TRILLIONS 2016

Corporations Avoid Taxes By Offshoring $2.5 Trillion — More Than The GDP Of France
http://www.ibtimes.com/political-capital/corporations-avoid-taxes-offshoring-25-trillion-more-gdp-france-2427041

America says it cant afford free college or universal health care...while US companies stash $2.5 trillion offshore to avoid $700B in taxes
Scottish firms are pushing Swiss bank accounts to intl tax dodgers (the ugly face of Scottish Ltd Partnerships)
http://www.heraldscotland.com/news/14777122.Scottish_firms_pushing_Swiss_bank_accounts_to_international_tax_dodgers/?ref=twtrec

Tax loopholes allow Apple, Nike, and others to avoid US taxes that could pay for Obamacare six times over
http://qz.com/800678/if-apple-nike-and-365-other-fortune-500-companies-repatriated-their-offshore-riches-theyd-have-to-pay-718-billion-in-us-taxes/

PANAMA PAPERS SEARCH THROUGH THE PUBLIC DATABASE

The database contains ownership information about companies created in 10 offshore jurisdictions including the British Virgin Islands, the Cook Islands and Singapore. It covers nearly 30 years until 2010.

Search through the data and visualize the networks around thousands of offshore entities, including, when available, Mossack Fonseca’s internal records of the company’s true owners. The interactive database will also include information about more than 100,000 additional companies that were part of the 2013 ICIJ Offshore Leaks investigation. It will be a careful release of basic corporate information.  ICIJ won’t release personal data en masse; the database will not include records of bank accounts and financial transactions, emails and other correspondence, passports and telephone numbers. The selected and limited information is being published in the public interest.
 

It exposed the role of big banks in facilitating secrecy and tax evasion and avoidance. And it showed how companies and individuals blacklisted in the U.S. and elsewhere for their links to terrorism, drug trafficking and other crimes were able to do business through offshore jurisdictions.

The top ten for financial secrecy Source: The Tax Justice Network

1. Switzerland
2. Hong Kong
3. USA - Delaware is one of four US states - the others are Nevada, Arizona and Wyoming - that have been criticised for their lax financial regulation. Many of the firms are suspected of being "ghost companies".
   NY going after M.F. Corporate Services in Nevada
4. Singapore
5. The Cayman Islands - Ugland House says the building is the registered office of 18,000 companies.
6. Luxembourg
7. Lebanon
8. Germany
9. Bahrain
10. United Arab Emirates

 

New Zealand Offshore Company Agents: Mossack Fonseca is Far From Alone

The tip of an iceberg  It's important to put the Panama Papers in context.  Mossack Fonseca, the Panamanian law firm the Panama Papers were obtained from, is merely one of dozens of entities selling NZ's flawed trust laws and legal loopholes to the world.

 

Submission to the Committee on Economic, Social and Cultural Rights  58th Session  Geneva, June 06-24, 2016  
Shadow report and recommendations concerning the:  United Kingdom of Great Britain and Northern  Ireland  to be considered in connection with the sixth periodic report (E/C.12/GBR/6)  UK Responsibility for the Impacts of Crossborder  Tax Abuse on Economic, Social and  Cultural Rights

M.F. Corporate Services Wyoming LLC failed to maintain the required statutory information for performing the duties of a registered agent under Wyoming law. the Cowboy State has roughly one registered company per every 4.5 residents. In response to criticism in 2006, the state began requiring that registered agents who incorporate companies keep contact information for companies. Several agents with whom McClatchy spoke said it is not their job to know who the true owners of companies are.

The way this process works is fairly simple on a macro level. Corporations set up affiliated shell companies in countries where taxes are low or nonexistent and reroute payments and liabilities to serve their needs. For instance, the car service Uber processes payments outside of the United States through its shell corporation in Bermuda, a tax haven with a 0 percent tax rate, where it then posts its profits. That leaves less than 2 percent of its net revenue taxable by the United States.

The world's über-rich are stuffing their cash in the US because it's the best tax haven in the world

BECAUSE The Treasury Department did not agreeing to the OECD standards.

Loophole USA: the vortex-shaped hole in global financial transparency

Rothschild’s Penney wrote that the U.S. “is effectively the biggest tax haven in the world.” The U.S., he added in language later excised from his prepared remarks, lacks “the resources to enforce foreign tax laws and has little appetite to do so.”

Wealthy folks are moving their money out of traditional tax havens and into the US.  Bloomberg Businessweek's Jesse Drucker reports that the US is one of only a handful of countries not to have signed on to an international set of standards designed to crack down on wealthy people dodging taxes.  That has led to the US becoming a "leading tax and secrecy haven for rich foreigners," according to Drucker.  The Bloomberg story said:  Everyone from London lawyers to Swiss trust companies is getting in on the act, helping the world's rich move accounts from places like the Bahamas and the British Virgin Islands to Nevada, Wyoming, and South Dakota.  The story focuses on the establishment of a trust company in Reno, Nevada, by financial services firm Rothschild & Co.. Scott Cripps, the trust's managing director, told Drucker that the firm's wealthy clients were moving money out of traditional offshore centers and into places like Nevada.  "There's a lot of people that are going to do it," Cripps told Drucker.

1/2/16 Switzerland signs deal to end banking secrecy http://internationalbanker.com/
BUT THE UNITED STATES DOESN'T !!!!!

Switzerland, in an effort to combat tax evasion and money laundering activities, has agreed to a deal with the Organisation for Economic Co-operation and Development (OECD) agreeing to exchange data with 60 other countries that will effectively end its banking secrecy.  Switzerland is the world’s largest offshore wealth center, with an estimated $2.2 trillion in assets compared to a $632.2 billion GDP.  The fight to open up Switzerland’s infamous banking system to assess tax evasion and illicit funds has been ongoing on for the past few years. It already has bilateral tax collection agreements with the UK and Austria.  This tax agreement, was brought forward by the OECD and includes all G20 states and most European States.  With the signing of this convention, the Swiss government can now ask large private banks like UBS AG, Julius Baer, and Credit Suisse Group AG to release information on their clients to tax auditors both locally and internationally.  There was much resistance from the Swiss bankers, including the chairman of the Swiss Bankers Associated, Patrick Odier who does not think that this automatic release of information is compliant with international standards.  Steps towards banking transparency had been attempted previously, but failed. A few months ago, the Swiss parliament refused to discuss a bill that would change legislation and comply with US Foreign Tax Compliance Act, a bilateral client information swap with the US.  But under intense pressure from US, Germany, and France, the banks were signed on to the convention. With many politicians welcoming the change, Stefan Fluckiger, the Swiss ambassador to the OECD mentioned “The signing of the convention confirms Switzerland’s commitment to the global fight against tax fraud,” in a statement. The deal still needs to be ratified in the parliament.  However, the Swiss banking industry which has reached $8.5 trillion in offshore wealth will have to adapt to these changes. The secrecy was one of the most important attractions for depositors and foreign bank assets have decreased by $921 billion in the last four years as a result of fears that this secrecy would soon be compromised.  The US has had a long standing problem with this secrecy since UBS, Switzerland’s biggest bank, in 2009, admitted that it had helped 52,000 Americans evade taxes. Since then, another bank, Wegelin & Co. has also admitted to helping clients hide money including $1.2 billion from American sources. The IRS and the US government are reported to be investigating over a dozen Swiss banks.

HOW THEY GOT AWAY WITH NOT PAYING TAXES

OFFSHORE BANKING “PANAMA WAS LARGELY A CREATION OF THE U.S.,” SAYS BARNEY WARF, A UNIVERSITY OF KANSAS GEOGRAPHY PROFESSOR WHO STUDIES OFFSHORE BANKING. Today, he says, “Panama is essentially an extension of the U.S. economy.” It harkens back to the early 20th century, when canal workers were paid in American dollars.

THE DUTCH SANDWICH 
Google accounts show 11 billion euros
moved via low tax 'Dutch sandwich' in 2014

APPLE Using investigatory powers not available to their UK counterparts, staff on the Senate permanent subcommittee on investigations, chaired by Levin, revealed details of how Apple's Irish companies managed to get their tax bill down to less than 1%. The Senate staff found that some of these Irish companies seemed to have no tax residency anywhere in the world. The Irish tax authorities treated them as American businesses for tax purposes because these companies are managed and controlled from the US. At the same time, American tax law looked more at the companies' registration in Ireland and determined that their profits were not taxable in the US. This was, said Levin, "the holy grail of tax avoidance". In October last year, the Irish government pledged to introduce new rules on determining tax residency in the wake of senate committee allegations that it was behaving like "a tax haven". Finance minister Michael Noonan said he would make it illegal for a company registered in Ireland to have no tax domicile anywhere. 
Apple Inc. Could Owe $8 Billion In Back Taxes To EU EU’s executive arm began investigating Apple’s Irish tax affairs. Almunia told Ireland that tax arrangements in 1990 and 2007 “confer an advantage on Apple” and appear to amount to state aid. To promote fair competition, the European Union prohibits any member state from treating a particular company different from others.  Ireland’s 12.5 percent corporate tax rate is low by international standards, but a U.S. Senate subcommittee found last year that Apple has managed to pay an effective tax rate of less than 2 percent and even no taxes on some profits in Ireland.  “What’s troubling the EU is why did they get that preferential rate?” said Martin Sullivan, chief economist at Tax Analyst, a trade publication.

STARBUCKS  application of transfer pricing rules –  have been the focus of controversy. Starbucks pointed out that its tax affairs had been approved by HMRC, it also told MPs the group had legitimately secured a tax deal with the Netherlands that gave "a very low tax rate".  Asked what the rate was, Starbucks's Seattle-based chief financial officer Troy Alstead, who has since been promoted to chief operating officer, told the public accounts committee: "The tax authority, under our Dutch ruling, has asked us not to share that publicly." Starbucks agree to temporarily unwind aggressive intra-group transactions that had depressed UK taxable profits. This moratorium will expire in December this year, and the company has suggested it will result in an extra £20m of UK tax being paid.

3/9/16 Cayman National units admit helping U.S. clients evade taxes
Two units of Cayman National Corporation Ltd pleaded guilty to U.S. charges on Wednesday as part of a $6 million settlement of an investigation into how the financial services firm helped Americans evade paying taxes.  Cayman National Securities Ltd and Cayman National Trust Co Ltd each pleaded guilty in federal court in Manhattan to conspiring with U.S. taxpayer clients to hide $130 million in offshore accounts and evade paying taxes from 2001 to 2011.

1/17/16 Tax haven blacklist omits Luxembourg as Brussels announces reform plans

A blacklist of the world’s 30 worst-offending tax havens, published on Wednesday by the European commission, includes the tiny Polynesian island of Niue, where 1,400 people live in semi-subsistence — but does not include Luxembourg, the EU’s wealthy tax avoidance hub.  Niue, situated east of Tonga in the Pacific Ocean, has appeared on tax haven lists before. But the island, which has an economic output estimated at just $10m (£6.3m) a year, has rarely been cast as a major threat to the tax receipts of Europe’s largest economies.  The list also includes various well-known havens — among them the Cayman Islands, British Virgin Islands and Guernsey — but other jurisdictions that are commonly labelled as offshore tax avoidance hubs were notably missing. Jersey and Switzerland, for example, were not named.
Within Europe, Monaco, Lichtenstein and Andorra made it onto the blacklist. The commission explained, however, that the list of 30 “non-cooperative jurisdictions” was designed only to assess non-EU members. As a result, the new register does not include countries such as the Netherlands, Ireland, or Luxembourg — all of which are under investigation by the European competition authorities, suspected of offering “sweetheart” tax deals to multinationals.  The industrial scale on which Luxembourg — one of the richest per capita countries in the world — was facilitating the tax avoidance ploys of large corporations was laid bare last year in the LuxLeaks scandal.

1/13/16 U.S. Will Track Secret Buyers of Luxury Real Estate all-cash purchases made by shell companies

FINALLY Ms. Calvery, the director of the Financial Crimes Enforcement Network, the Treasury unit running the initiative.
The government is requiring title insurance companies, which are involved in virtually all sales, to discover the identities of buyers and submit the information to the Treasury.  The government will put the information into a database for law enforcement.  The Treasury’s program will affect billions of dollars in real estate transactions. In Manhattan, the initiative requires buyers in sales of more than $3 million to be reported; in Miami-Dade County, it requires reporting on sales of more than $1 million.
The initiative is part of a broader federal effort to increase the focus on money laundering in real estate. Treasury and federal law enforcement officials said they were putting greater resources into investigating luxury real estate sales that involve shell companies like limited liability companies, often known as L.L.C.s; partnerships; and other entities.  Future investigations, they said, will focus increasingly on professionals who assist in money laundering, including real estate agents, lawyers, bankers and L.L.C. formation agents. The investigation found that real estate professionals, especially in the luxury market, often do not know much about buyers. Until now, none of them have been legally required to.  The use of shell companies in real estate is legal, and L.L.C.s have a range of uses unrelated to secrecy. But a top Treasury official, Jennifer Shasky Calvery, said her agency had seen instances in which multimillion-dollar homes were being used as safe deposit boxes for ill-gotten gains, in transactions made more opaque by the use of anonymous shell companies.  
Concerned about illicit money flowing into luxury real estate, the Treasury Department said Wednesday that it would begin identifying and tracking secret buyers of high-end properties. The initiative will start in two of the nation’s major destinations for global wealth: Manhattan and Miami-Dade County. It will shine a light on the darkest corner of the real estate market: all-cash purchases made by shell companies that often shield purchasers’ identities.  It is the first time the federal government has required real estate companies to disclose names behind cash transactions, and it is likely to send shudders through the real estate industry, which has benefited enormously in recent years from a building boom increasingly dependent on wealthy, secretive buyers.
In New York, The Times examined a decade of ownership at a prominent condominium complex near Central Park, the Time Warner Center, and found a number of hidden owners who had been the subjects of government investigations. They included former Russian senators, a former governor from Colombia, a British financier, and a businessman tied to the prime minister of Malaysia, who is now under investigation.  In Florida, The Times uncovered a condominium in Boca Raton tied to Mexico’s top housing official, who recently stepped down and is now a leading contender for the governor’s office in the southern state of Oaxaca. nymag.com

US tax campaign group Americans for Tax Fairness revealed that Walmart has a “vast, undisclosed network” of subsidiaries and branches in known tax havens, which could minimize its taxes on foreign earnings.

 

WHY AUSTERITY WHEN HALF THE WORLD'S TRADE PASSES THROUGH TAX HAVENS? 

http://www.tackletaxhavens.com - @Naomi_Fowler - @NickCohen4 - @TaxJusticeNet
 

2015 European Union releases world tax havens blacklist 
The list of 30 territories includes Hong Kong and Brunei in Asia, Monaco, Andorra and Guernsey in Europe and a series of Caribbean havens including the Cayman Islands and British Virgin Islands.
EU Commission's tax haven blacklist leaves out Netherlands, Ireland, & Luxembourg. Apparently they're only assessing non-EU members.

2015 US overtakes Caymans and Singapore as haven for assets of super-rich
But financial secrecy index report notes if UK and affiliated tax havens such as Jersey were treated as one, it would top the list.

2015 Results  -- The US is ranked third PDF, behind Switzerland and Hong Kong, in the financial secrecy index, produced every two years by TJN. @taxjusticenet

 

MAKE SURE YOU READ CHAPTER 7: HOW THE RICH PROTECT THEMSELVES

• How Banks Help You Get Rich - Tax Havens & Off Shore Banking

• Wal-Mart Has $76 Billion in Undisclosed Overseas Tax Havens
  Multinational Corporate Tax Avoidance 
  90% of Wal-Mart’s overseas assets are owned by subsidiaries in Luxembourg and the Netherlands, two of the most popular corporate tax havens. Units in Luxembourg -- where the company has no stores -- reported $1.3 billion in profits between 2010 and 2013 and paid tax at a rate of less than 1%, according to the report. Wal-Mart has historically resisted unions and discourages employees from joining them. 
• Companies such as Google Inc., Apple Inc. and Starbucks Corp. have come under fire for avoiding billions of dollars of income taxes by attributing profits to mailbox subsidiaries in low-tax jurisdictions like Bermuda. Companies that move profits offshore by assigning valuable patent rights to mailbox units.
• Aggressive and remarkably unashamed marketing of financial secrecy from Bermuda, via @WeAreBermuda Elliot Wilson details long-held links between Bermuda and the three Asian powerhouses, China, Hong Kong and Singapore. Of the three city states, Hong Kong has the strongest bilateral relationship with Bermuda, says the article, citing International Monetary Fund data that indicates portfolio investment totalling USD$109 billion flowed from Hong Kong into Bermuda in 2013—a record high, and an increase of more than 150 percent in five years. “Only the US provides a consistently larger source of inward portfolio capital to the island,” Wilson notes. http://wearebermuda.com/blog/2015/11/08/bermuda-trust-industry-experts-head-to-asia-conference/
• Wal-Mart employs a popular legal strategy in that country called a hybrid loan. It permits companies’ offshore units to take tax deductions for interest paid -- typically on paper only -- to their parents in the U.S. The parent, however, doesn’t include that interest as taxable income in the U.S.

9/3/15 Schroders’ Swiss Bank Pays $10.4 Million in Deal With U.S.
http://www.bloomberg.com/news/articles/2015-09-03/schroder-bank-pays-10-4-million-to-avoid-u-s-tax-prosecution

Schroders Plc’s Swiss bank will pay a $10.4 million penalty to avoid prosecution under a U.S. program that requires participating firms in Switzerland to say how they helped American clients avoid taxes. Schroder & Co. Bank AG’s penalty is the fourth highest among 33 banks that have settled with the Justice Department this year after disclosing they may have committed tax-related crimes related to U.S. accounts.
The banks have paid a combined $308.9 million to receive non-prosecution agreements.
The bank had 243 U.S. related accounts totaling $506 million in 2008, according to the Justice Department. “Swiss banks continue to lift the veil of secrecy surrounding bank accounts opened and maintained for U.S. individuals in the names of sham structures such as trusts, foundations and foreign corporations,” Larry J. Wszalek, acting deputy assistant attorney general in the Justice Department’s tax division, said in a statement Thursday. London-based Schroders is the U.K.’s largest publicly traded asset manager by market value and has about 309.9 billion pounds ($473 billion) in funds under management. The Swiss bank is part of the firm’s wealth management business, which oversees 32 billion pounds in assets. The firm set aside 15 million pounds in March 2014 for a possible penalty.
Tax Reporting “We have invested and will continue to invest considerable resources in systems to support the increasing demands of enhanced international tax reporting,” according to a bank spokeswoman.
HOW THEY PULL IT OFF
Four bank employees traveled to the U.S. between 2004 and 2008 in connection with U.S. accounts, a practice that the firm banned after March 2009, according to a deal under which the firm won’t be prosecuted for disclosing past practices. The bank also handled large cash withdrawals on U.S. accounts, and in 26 instances account holders got cash or checks of $100,000 or more. In three cases, the amount exceeded $1 million.
More than 100 banks signed up for the disclosure program at the end of 2013, although some have dropped out. Justice Department officials say they expect to complete all the agreements by the end of the year.
In the program, banks must tell the Internal Revenue Service and Justice Department about accounts held by U.S. taxpayers, detail where money went when secret accounts were closed, and cooperate in treaty requests for information by the U.S. Authorities are using that information to build new cases.
“A significant element of the program is the highly detailed account and transactional data that has been provided to IRS specifically for law enforcement purposes,” Richard Weber, chief of the IRS criminal investigation division, said in a statement. “We will continue to use this information to vigorously pursue U.S. taxpayers who may still be trying to illegally conceal offshore accounts,” he said.

5/3/14 Offshore tax evasion

The Treasury Department said that it would allow 2014 and 2015 to be a transition period for banks that are making a “good faith” effort to comply with the Foreign Account Tax Compliance Act, which goes into effect on July 1. FATCA, enacted by Congress in 2010, forces foreign banks to disclose certain account information to U.S. authorities, or face a withholding tax. The Treasury Department has signed dozens of agreements with other countries to enforce FATCA. The Securities Industry and Financial Markets Association, which last month asked Treasury for a FATCA transition period, praised the administration’s decision. SIFMA had argued that banks would not have enough time to comply with a batch of Treasury regulations issued this year without that sort of breathing room.

TRANSFER PRICING EXPLAINED

On transfer pricing

Interview Highlights

"Transfer pricing is the law of the land, not just in the U.S. but in countries throughout the world. It's the mechanism for allocating income through various subsidiaries around the world and every major country in the world. And it essentially relies on the assumption that two subsidiaries of the same company can bargain with each other and strike a price that's equivalent to an arm's length transaction that goes on between two unrelated companies in the real world. There are a number of people out there that think that makes this an unenforceable system — that you cannot have two subsidiaries of the same company dealing with each other at arm's length. In other words, there's no way that two subsidiaries of the same company could interact with each other the way two unrelated parties would deal."

On the American Jobs Creation Act

"In 2004, Congress passed the American Jobs Creation Act, which permitted countries to bring back profits from offshore one time at a reduced rate — paying 5.25 percent instead of 35 percent. And companies brought back about $312 billion that qualified for the break, and there's a fair amount of literature that shows very little job creation went on as a result of that. And most of that money was used to buy back stock. And companies right now are lobbying for a repeat of that break."

On remaining competitive

"The U.S. and other countries need to create climates that are conducive to business. That's absolutely true. As long as this system exists where companies have the ability to shift profits, they're going to take advantage of that. I guess the question is: Do we want to have a system where your taxable income has so little relation to where the real-world economic activity takes place and, more broadly, the question it raises about the fairness of the tax system — the result of this is that it shifts the tax burden to the people that don't have the ability to do this, i.e., the 99 percent of Americans who don't have access to sophisticated tax advisers and also to the companies that are not multinational."

OFF SHORE TAX HAVENS
BERMUDA / DUTCH / IRELAND

Dutch royalty conduit

NPR

The top corporate income tax level in the United States is 35 percent. In the United Kingdom, it's 28 percent.

But in Ireland, it's only 12.5 percent, and in Bermuda there's no corporate income tax at all. That means multinational companies that shift their earnings through Ireland or Bermuda can save billions of dollars in taxes each year.

listen On today's Fresh Air, Bloomberg News reporter Jesse Drucker, who has written extensively about corporate tax-dodging, explains how companies like Google, Pfizer, Lilly, Oracle, Facebook and Microsoft have managed to reduce their tax rates by hundreds of millions — and in some cases, billions — of dollars by taking advantage of offshore tax havens.

"You have an Irish operating company out there selling ads — they actually have real employees in Dublin," he explains. "They make payments to a Dutch subsidiary with no employees, which in turn makes payments to a Bermuda-headquartered Irish company with no employees. And the result of all of this is that it all helps to cut about $3 billion in Google's income taxes in the last three years."
"They're a company that does almost 100 percent of its sales here in the U.S., they have almost 100 percent of their employees in the U.S., they're headquartered in New York City and yet the majority of their profits show up overseas, most of them attributed to a mailbox in Bermuda," Drucker says. "An economist at Reed College estimated that the U.S. is losing $60 billion a year in federal tax revenue , but she's actually in the process now of revising that estimate and has arrived at a figure closer to $90 billion."

In October, Drucker reported that Google had saved $3.1 billion in taxes in the past three years by shifting the majority of its foreign profits into accounts in Ireland, the Netherlands and Bermuda using financial techniques called "the Dutch Sandwich" and "the Double Irish" arrangement. Basically, he says, Google credited its Irish office with the majority of its non-U.S. sales revenue — and then shuttled that money through various subsidiaries located in Ireland and other countries to save billions in taxes.
"You have an Irish operating company out there selling ads — they actually have real employees in Dublin," he explains. "They make payments to a Dutch subsidiary with no employees, which in turn makes payments to a Bermuda-headquartered Irish company with no employees. And the result of all of this is that it all helps to cut about $3 billion in Google's income taxes in the last three years."

The Cayman Islands economy

The Cayman Islands economy = $3 billion U.S.companies earnings there = $51 billion
http://foreignpolicy.com/2012/01/24/house-of-19000-corporations/

Grand Cayman is known for its beach resorts, world-class scuba diving, and as the unlikely facilitator of billions of dollars in global financial transactions.

The island has been garnering a lot of publicity this week — not the good kind — thanks to the scrutiny of presidential candidate Mitt Romney’s tax returns, which include millions of dollars in foreign investments. According to ABC News, Romney has as much as $8 million invested in 12 Cayman Islands funds. (The governor has money parked in Bermuda, Ireland, and Luxembourg as well.)

Romney’s Cayman riches aren’t actually a new story. The L.A. Times reported in 2007 that the former Massachusetts governor was listed as a general partner and investor in BCIP Associates III Cayman, a fund set up by his old employer Bain Capital. Bain has as many as 138 funds registered in the Caymans, according to ABC. The BCIP fund is registered at P.O. Box 908GT in George Town, the Caymanian capital. This is the address of Walker House, the local office of international law firm Walkers. It’s also, on paper at least, home to dozens of other companies including Del Monte Fresh Produce Inc., the global food giant physically headquartered in Coral Gables, Florida.

Walker House is just one of a number of addresses in downtown George Town used by corporations, including Coca-Cola, Oracle, and Intel, to minimize taxes or cut out the red tape in international transactions. The vast majority of these companies are legally prohibited from doing business in the Caymans themselves. The most famous of these addresses, located just down the road at 335 South Church St., is Ugland House, a five-story office building that is home — physically — to law firm Maples and Calder, and — on paper — nearly 19,000 companies.

President Barack Obama called out Ugland House specifically in a 2009 speech, saying "either this is the largest building in the world or the largest tax scam in the world." Legally speaking, it’s neither. A 2008 GAO report found no evidence of illegal activity by Maples and Calder or any of the entities registered at Ugland House, about half of which have billing addresses in the United States. But, particularly in the case of hedge funds and private equity funds like Bain’s — about 38 percent of Ugland’s "tenants" — the building makes a mockery of the U.S. tax system.

As Romney’s campaign has repeatedly stated, investors in these funds do pay U.S. taxes on their income. But there are significant financial incentives in having a Cayman address. First of all, the British territory has no direct taxes, and makes it exceptionally easy to set up a new company — it only costs about $600. A fund with a Cayman address also allows foreign investors to invest in U.S.-run funds — such as the bricks-and-mortar incarnation of BCIP Associates on Huntington Avenue in Boston — while avoiding double-taxation in both the United States and their home countries.

A managing partner of Maples and Calder told Bloomberg in 2009 that “having a registered office address in the Cayman Islands is driven by commercial considerations, not by tax avoidance," but there are tax advantages for U.S. investors. Under U.S. tax law, a person is taxed on all foreign income. But a foreign corporation is not taxed on foreign income until it is distributed to shareholders, meaning greater returns for investors like Romney. The Caymans also allow U.S. non-profit entities like pension funds and university endowments to invest in hedge funds without paying the "unrelated business income tax," which could be as high as 35 percent if those funds were based in the United States.

There are also concerns that the complexity and lack of transparency in Cayman Islands transactions can make tax evasion and money laundering easier, though there’s no evidence that Bain or Romney were involved in these activities and the vast majority of Cayman Islands transactions are entirely legal.

This is not to say they’re popular. The organization Citizens for Tax Justice estimates that the U.S. federal government loses as much as $100 billion per year in revenue due to tax havens. Sen. Carl Levin has proposed legislation that would treat foreign-registered, U.S.-based corporations as American companies for the purposes of tax law. Legislation to shut down the Caymans as a tax haven has been proposed in the British parliament. Given the nearly $5 trillion held by U.S. corporations and individuals in tax-haven countries, though, these motions are likely to face some stiff, and well-funded resistance.

As for Romney, he argues, "I don’t think you want someone as the candidate for president who pays more taxes than he owes." Fair enough, but it will be up to voters to decide what the definition of the word "owes" is.

Double Irish

 

 

12/6/13 The Double -  Irish Facebook caught in controversy over earnings exported to Cayman Islands Irish government collected £4.4m last year from world's largest social media company that earned estimated £645m in UK

Facebook uses a subsidiary in Ireland to collect advertising revenue from around the world. Accounts filed in Dublin this week show that business is booming, with international earnings rising to £1.5bn in 2012, up from £840m in 2011. But the Irish government collected just £4.4m in tax from the world's largest social media company last year. Using a complex web of subsidiaries in a tax structure known as the "double Irish", employed by a number of American multinationals, Facebook shelters much of the money it earns outside its home market from governments around the world.

Other companies have also been able to cut hundreds off their tax bills by shifting or licensing their earnings overseas. Forest Laboratories Inc., the manufacturer of the antidepressant Lexapro, cut its total income tax bill by more than a third last year by allocating income through various subsidiaries.

"They're a company that does almost 100 percent of its sales here in the U.S., they have almost 100 percent of their employees in the U.S., they're headquartered in New York City and yet the majority of their profits show up overseas, most of them attributed to a mailbox in Bermuda," Drucker says. "An economist at Reed College estimated that the U.S. is losing $60 billion a year in federal tax revenue [from all U.S. companies], but she's actually in the process now of revising that estimate and has arrived at a figure closer to $90 billion." Technically, companies aren't avoiding paying U.S. tax when they shift their income abroad, Drucker says. "You're merely deferring it for as long as you keep it outside the U.S.," he says. "These are indefinitely reinvested earnings in your non-U.S. operations. When you bring [earned income] home you're supposed to pay U.S. tax minus a credit for the income taxes you've already paid overseas. But companies have a number of techniques for bringing back profits without paying the tax."
One technique, Drucker says, is lobbying the federal government for a tax holiday — a period of time when companies can bring back offshore profits one time at a reduced rate. Advocates of the plan say it would function as a non-government stimulus plan because as much as $1 trillion could flow back into the United States.
"It sounds reasonable," Drucker says, "but I think there are two important things to say about that. No. 1 is that companies, according to the latest data from the Federal Reserve, are sitting on a record pile of cash — $1.9 trillion. So to the degree the economy is challenged right now, it's not from lack of cash at the disposal of companies. And there's a fair amount of academic research on what happened [after the last tax holiday, in 2004]. And the result is that there was very little hiring and very little investment that went on as a result of the $300 [or so] billion that came back. Most of that money seemed to buy back stock."

• Dodging Repatriation Tax Lets U.S. Companies Bring Home Cash
• Google 2.4 Percent Rate Shows How $60 Billion Lost To Tax Loopholes
• Tax 'Shenanigans' Turn U.S. Sales To Foreign Income With Billions Offshore
• U.S. Companies Dodge $60 Billion In Taxes With Global Odyssey
• Exporting Profits Imports U.S. Tax Reductions For Pfizer, Lilly, Oracle

 

RELATED NPR STORIES

• Wall Street Finds Lucrative Market In Tax Liens
• Offshore Tax Evaders Take Advantage Of IRS Amnesty Nov. 18, 2009
• Tax Cheats Look Offshore April 13, 2008
• David Cay Johnston On How The Rich Get Richer Jan. 3, 2008

Jane Penner, a spokeswoman for Google, told Bloomberg News the technology giant's practices "are very similar to those at countless other global companies operating across a wide range of industries." She declined to address the particulars of its tax strategies. Frank J. Murdolo, Forest Laboratories' vice president of investor relations, declined to comment on the company's tax planning, Bloomberg News said.

UK RICHEST PEOPLE OFF SHORE ACCOUNTS caught

 

5/9/13 100 of UK's richest people concealing billions in offshore tax havens 

More than 100 of Britain's richest people have been caught hiding billions of pounds in secretive offshore havens, sparking an unprecedented global tax evasion investigation. George Osborne, the chancellor, warned the alleged tax evaders, and a further 200 accountants and advisers accused of helping them cheat the taxman: "The message is simple: if you evade tax, we're coming after you." HM Revenue & Customs warned those involved, who were named in offshore data first offered to the authorities by a whistleblower in 2009, that they will face "criminal prosecution or significant penalties" if they do not voluntarily disclose their tax irregularities, as the UK steps up its efforts to clamp down on avoidance ahead of the G8 summit in June. The 400-gigabyte cache of data leaked to the authorities is understood to be the same information seen by the Guardian in its Offshore Secrets series in November 2012 and March this year. It reveals complicated financial structures using companies and trusts stretching from Singapore and the British Virgin Islands to the Cayman Islands and the Cook Islands. [...]

SURVEILLANCE

 

​"Blurring the lines" between the war on drugs and the war on terror:
In many of these relationships, (see memo 2004 written by a manager of the NSA account with the Drug Enforcement Administration (DEA) describing the close working relationship between the two agencies.​) the only reason that these regimes are willing to work with the DEA is that they are given a LOT of assurances that they are NOT opening the door to the rest of the US government, which might include efforts to overthrow the government, or have undue influence….

5/19/14 Data Pirates of the Caribbean: The NSA is Recording Every Cell Phone Call in the Bahamas

The National Security Agency is secretly intercepting, recording, and archiving the audio of virtually every cell phone conversation on the island nation of the Bahamas.  According to documents provided by NSA whistleblower Edward Snowden, the surveillance is part of a top-secret system – code-named SOMALGET – that was implemented without the knowledge or consent of the Bahamian government. Instead, the agency appears to have used access legally obtained in cooperation with the U.S. Drug Enforcement Administration to open a backdoor to the country’s cellular telephone network, enabling it to covertly record and store the “full-take audio” of every mobile call made to, from and within the Bahamas – and to replay those calls for up to a month.  SOMALGET is part of a broader NSA program called MYSTIC, which The Intercept has learned is being used to secretly monitor the telecommunications systems of the Bahamas and several other countries, including Mexico, the Philippines, and Kenya. But while MYSTIC scrapes mobile networks for so-called “metadata” – information that reveals the time, source, and destination of calls – SOMALGET is a cutting-edge tool that enables the NSA to vacuum up and store the actual content of every conversation in an entire country.​ The NSA helped source information for a secretive DEA unit called the Special Operations Division. The NSA's information-gathering role was then obscured through a process called "parallel construction" when the drug agency brought criminal charges.​
 

 

0% ZERO Corporate Income Tax Rate
For the 1%

Bahama / Bermuda / Cayman Islands 0% Corporate Income Tax Rate

UBS had been fined in the past but nowhere near as much as Credit Suisse.  Questions have been asked, ever since the end of the financial crisis, about why banks have not faced harsher penalties as a result of the calamity and catastrophe that many feel they were responsible for.​

5/20/14 Credit Suisse helped 'tax cheats'
Swiss banking giant Credit Suisse has pleaded guilty to helping thousands of US clients evade paying taxes to the US government and agreed to pay a $2.6bn (£1.5bn) fine.  It is the biggest bank to plead guilty to criminal charges in the US in more than 20 years. The $2.6bn payment is the highest in a US criminal tax investigation to date, according to US authorities.  However, as part of the agreement with US regulators, the bank will not lose its banking license in the US.  The bank does not expect its UK and Swiss banking licenses to be affected. The tax evasion schemes went back decades, saying that in one case, the practice of using sham entities began more than 100 years ago.  The US Department of Justice said Credit Suisse "operated an illegal cross-border banking business" that helped thousands of US customers conceal offshore assets and income from US tax authorities.  However, according to US media reports, neither Credit Suisse chairman UrsRohner nor chief executive Brady Dougan are expected to lose their jobs as a result of the agreement. Switzerland's oldest bank, Wegelin & Co., pleaded guilty in a New York court to helping Americans hide $1.2 billion from the Internal Revenue Service over a decade-long period. Wegelin's plea, and a $57.8 million fine, forced the bank to shut its doors. It follows a $780 million settlement with UBS in 2009 that forced the Swiss banking giant to identify the names of its U.S. account holders.

2015 Focus on Wealthy
The bank recorded a net income of 1.05 billion francs ($1.1 billion) in the second quarter. That was above analyst estimates and compares with a loss of 700 million francs a year earlier when bank was fined in the U.S. for helping Americans evade taxes.
http://www.bloomberg.com/news/articles/2015-07-23/thiam-to-shrink-investment-bank-to-focus-on-wealth-management

 

We're Not Broke 2012 Documentary

 

Transfer Pricing
There is
nothing illegal
about it!

7:40 TRANSFER PRICING EXPLAINED
Multinationals will use a tax haven as a way station. It is not a place that they put money like people do but use it to pass money through there so it doesn't get taxed in the place that they earned the money. The money only passess through in a political and digital sense. But the money itself is onshore. It's in a bank in the United states but it's booked in those offshore places. They use the international tax rules to shift profits out of the U.S. into low tax country aka an offshore tax haven! They use all kinds of stupid but legal reasons to set up shell corporations in other tax havens for even lower tax management purposes.

19:35 People who specialize in Transfer Pricing at the IRS have a way of becoming the senior officials at Price Waterhouse / Ernst and Young / KPMG / Deloitt / etc. Mark everson IRS Commissioner 2003 - 2007 joined alliantgroup a firm that consults corporations on minimizing their tax bill in 2009.
KPMG is one of the largest professional services companies in the world and one of the Big Four auditors, along with Deloitte, Ernst & Young etc. KPMG found leaking data, as it criticises every single company in the FTSE 350 for doing the same. 7/24/13

10:30 Transfer Pricing Practices
Forest Laboratories set up a Bermuda Subsidiary office in Milner House 18 Parliament St. Hamilton HM CX Bermuda

10:55 In 2009 Viagra's parent company, Pfizer, increased its net income by $1 Billion by shifting profits overseas. 2012 They report 100% of their profits in offshore locations and they have NO PROFITS being reported in the U.S. infact they have losses in the U.S. For the U.S. Treasury that is a tremendous loss of tax revenue. But Wall street loves the stock price!

Low corporate tax payments and rampant corporate lobbying.

Google ultimately offshores to Bermuda through Ireland and the offshore transfer pricing game results in google overseas tax rate reduced to a little of 2% on over 2 billion dollars - meanwhile Detroit goes bankrupt cause their is not federal tax money to spend on helping Detroit or anyone else in America!

Google paid just $16million in taxes on $18.5 billion to Britain in 2012 figures that revealed payments of £3.4m in tax on £3.2bn of sales to customers in Britain last year, with sales technically accounted for under the low-tax regime of Ireland.

 

Representation Without Taxation

1/23/13 Google, Facebook Continue To Flood Washington With Cash For Lobbying Efforts; Consumer Watchdog Calls Record Spending Cynical Bid To Buy Influence

9/2//13 Google pays $55 million tax in Britain on 2012 sales of $5 billion​ on sales of $4.9 billion to British customers, its accounts showed.  The Internet search giant paid a tax rate of 2.6 percent on $8.1 billion in non-U.S. income in 2012, because it channeled almost all of its overseas profits to a subsidiary in Bermuda which levies no corporate income tax, the group's accounts show.​

Bobbie Johnson has written a great overview of lobbying in Europe:  
…Google has one of the most complex European lobbying operations among Internet companies. It operates a significant team in Brussels, but also has staff in most other major European capitals — including Berlin, where it opened a new office housing seven lobbyists. Their job? To try and influence the German government over issues like privacy and copyright, where it is far stricter than most other nations.

 …Amazon is one of a number of American technology companies that is lobbying Brussels in order to weaken restrictions on data collection. It is not listed in the joint transparency register. And yet it does have a Brussels presence to help try and secure itself a good deal across the single market.

The Loopy Tax Strategies Of Google, Facebook, Apple, Amazon. They use legal loopholes and international transactions to weave a complex web of tax avoidance. 

• Google Now Spends More on Lobbying Than Lockheed Martin - The Wire​
• Google spent $25 million lobbying Washington during the course of the FTC probe, and it worked - The Next Web

 

Offshore Tax Havens

Every Major Technology company and Pharmaceutical Manufacture in the U.S., like Pfizer,  is engaged in this practice and relies on the offshore tax haven world for a very significant portion of it's profit.

They do have their headquarters here in the U.S., the workers are here, the IP is here but they don't pay their taxes. However they didn't get rich on their own.

Senator Elizabeth Warren Explains

2015 TAX JUSTICE FINANCIAL SECRECY INDEX

The Financial Secrecy Index ranks jurisdictions according to their secrecy and the scale of their offshore finanical activities. A politically neutral ranking, it is a tool for understanding global financial secrecy, tax havens or secrecy jurisdictions, and illicit financial flows or capital flight. The index was launched on November 2, 2015.

2015 Secrecy Ranking PDF 2015 RESULTS
1.	Switzerland
2.	Hong Kong
3.	USA SEE AT THE BOTTOM OF THE PAGE
4.	Singapore
5.	Cayman Islands*
6.	Luxembourg
7.	Lebanon
8.	Germany
9.	Bahrain
10.	United Arab Emirates (Dubai)
11.	Macao
12.	Japan
13.	Panama
14.	Marshall Islands
15.	United Kingdom*
* British overseas territory or crown dependency. If Britain's network were assessed together, it would be at the top.
See full index here

In 2010 corporate profits rose 37% and by the 4th quarter of 2010 corporate profits reached $1.68 trillion.

Sheppard said the reality of the offshore fund issue is as absurd as the plot of "Casino Royale," the most recent installment of the James Bond films.
That Britain should send well-dressed spies out alone after terrorist financiers, she wrote, is no more preposterous than the world’s most powerful country negligently allowing its resident investors to escape taxation and regulation by investing in secretive vehicles that are registered in tax and banking havens.
Several overseas locations have become major centers for hedge fund activity, including the Cayman Islands, Dublin, Luxembourg, the British Virgin Islands and Bermuda. Lately, Sheppard said during the session, Lichtenstein and the Netherlands have grown in popularity.
"They’re tax havens, [but] they’re respectable ones … over something that has 'island' in the title," she said. "The Germans knew—we know—individuals have been stashing money in these places forever. It’s the whorehouse on the edge of town."
Sheppard said the current law is "stupid," but puts the blame squarely on the lawmakers. "It’s not any hedge fund’s fault if there are stupid rules in place and you’re in a position to use them" she said.

BANKS

 

 

"Foreign tax havens [that] drain our jobs and dollars away from our shores...nearly 630 million dollars due to the Treasury does not come in each year, which means that those wage earners, the small businessmen and others who have their taxes withheld from their salaries and their paychecks must pay more" ~ President John F Kennedy

 

11/13/13 Five banks must divulge info on alleged tax dodgers: U.S. attorneys
The five banks targeted are Citibank, Bank of New York Mellon Corp, JPMorgan Chase, Bank of America and the U.S. branch of Britain's HSBC.

 

1/ 5/2008 Swiss bank’s crafty strategy shows how difficult it is to clamp down on tax havens 

In the City, firms have long used secretive foreign or offshore centres almost as a matter of course, channelling funds in their direction that would otherwise stay onshore and could attract tax. They maintain the offshore office fulfils a vitally important investment management function when in reality, it's often little more than a brass plate. However, as Brown and Obama's investigators might find, proving the claim is fiction is not easy. The Evening Standard has examined how one of the world's biggest private wealth management groups circulates funds via offices in the Cayman Islands, claiming they take major investment decisions — when the main work is apparently carried out in London. It shows the scale of the task facing tax inspectors here and in the US in an offshore purge. With offices in London and across the globe, Swiss-based Julius Baer banking group invests over $300 billion (£208 billion) in assets on behalf of institutions and wealthy individuals. Profits in 2007 were more than $1.1 billion. In London, one of its units was known as Julius Baer Investors or Julius Baer Investment Management (JBIM) until a management buyout in 2007. It was renamed Augustus Asset Managers, is based in Bevis Marks in the City, and is still 10% owned by Julius Baer. From London, Augustus controls assets of $12 billion but claims its profits are generated elsewhere, offshore at a Cayman Islands Baer subsidiary called Baer Select Management. Why? Simple, really. “If you would generate all the income in London, you would pay much more taxes,” acknowledged Max Obrist, a Cayman Islands executive of Julius Baer. </snip>

After UBS bought brokerage firm PaineWebber in 2000, the Swiss bank agreed to tell the IRS about U.S. clients who held U.S. securities in a UBS account.

As part of this Qualified Intermediary Agreement, or QI Agreement, UBS also agreed to withhold income taxes from U.S. clients who invested in foreign securities from the U.S.  Instead, UBS employees and managers helped U.S. taxpayers open new accounts in the names of nominees or "sham" entities to avoid the new reporting requirements, the DOJ alleged. Some UBS executives knew about the scheme too, it added.  Swiss bankers often traveled to the U.S. to market Swiss bank secrecy to U.S. clients interested in trying to evade income taxes. In 2004, they came roughly 3,800 times to talk about clients' Swiss bank accounts, according to court documents.  UBS managers and employees used encrypted laptops and "other counter-surveillance techniques" to avoid being caught and keep the identities of their clients secret, the DOJ said

About $100 billion in banking assets in the Bahamas alone, as well as substantial operations in the British Virgin Islands, Netherlands Antilles, Cayman Islands, and other Caribbean banking centers, move the money that disappears from the world's balance sheet in the form of the $200 billion "statistical discrepancy". Chief investment banker to the region is the International Trust Corporation, or Itco, created by Anglo-American in consortium with Barclays Bank of the U.K., the Royal Bank of Canada, and N.M. Rothschild of London - Itco creates banks, investment companies, commodities firms, tax shelters, trust funds, and insurance and reinsurance outlets throughout the Caribbean, smoothing contacts with local bank regulators and backstopping the legal position of the offshore market operators with which it deals. Itco is, in effect, the offshore-banking sister subsidiary of Phibro.

Maples and Calder

 

 

The Cayman Islands has the headquarters of international law firm Maples and Calder. Maples and Calder is a leading international law firm advising financial, institutional and business clients around the world on the laws of the Cayman Islands, Ireland and the

British Virgin Islands.
Sea Meadow House PO Box 173 Road Town Tortola VG1110 British Virgin Islands +1 284 852 3000 +1 284 852 3097 bviinfo@maplesandcalder.com

Ugland House
South Church Street
George Town, Cayman Islands
home to over 18,000 registered corporations.

 

 

OFF SHORE LEAKS

Massive Database Revealed

Massive database reveals offshore banking entities that could be used for tax evasion.

ICIJ’s investigative series on offshore secrecy – which draws from a cache of 2.5 million secret records.

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OECD proposes blueprint for cracking down on "tax-dodging strategies" of multinational companies such as Google, Apple, and Yahoo, following Offshore Leaks revelations

Map: Key Tax Haven Clients In the World

Notable names in the colossal leak of offshore financial records include, banking family scion Élie de Rothschild, Imee Marcos of the Philippine political dynasty and millionaire former playboy Gunther Sachs, who married Brigitte Bardot.

The Ugland House, the registered office for thousands of global companies, stands in George Town on Grand Cayman Island
A massive database of private offshore banking entitiesThe database contains ownership information about companies created in 10 offshore jurisdictions including the British Virgin Islands, the Cook Islands and Singapore. It covers nearly 30 years until 2010.
The International Consortium of Investigative Journalists said anyone can now search the records of some 100,000 companies, trusts and funds located in leading tax havens to see who could be making use of them to skirt home-country taxes. The group said it was doing so in the name of public interest and also hoped that crowd-sourcing the files would lead to more revelations about public figures who hide their money.
"Secrecy creates an environment where fraud, tax evasion, money laundering and other forms of corruption thrive. The Offshore Leaks Database helps remove this secrecy," said ICIJ director Gerard Ryle.

"Opening up the records serves the public interest by bringing accountability to an industry that has long operated in the shadows."

The ICIJ, which first revealed that it had the huge cache of computerised files last year, has already prompted investigations into tax dodging in a number of countries, including Greece, India, the Philippines and South Korea.

The release comes ahead of the G8 summit next week, where leaders of the world’s top economies will discuss a pact on sharing banking data to allow countries to fight tax evasion. The ICIJ said it did not put all of the data it has online. It stripped out personal information like e-mail addresses, bank account numbers and phone numbers.

Some of the information on the location of offshore entities has also been held back, it said.

Nor is there any financial information in the records, such as capital of the entities or profit and loss data. The data is also heavily focused on Asia and Asians, and Singapore-based or linked entities, especially Singapore-based wealth manager Portcullis TrustNet.

"Mahathir" brings up Mokhzani Mahathir, the son of Malaysia’s former prime minister, and several companies linked to him that are based in Malaysia’s offshore banking centre Labuan. A search for "Chearavanont", the family that controls Thailand’s giant CP Group conglomerate, lists several names, all apparently the children of CP chief Dhanin Chearavanont. They are tied to Mandolin Capital, registered in the British Virgin Islands, through Portcullis, but recorded as defunct in the database.

But there is nothing to indicate any wrongdoing, ICIJ acknowledges. "There are legitimate uses for offshore companies and trusts, and ICIJ does not suggest or imply that the people and companies included in the database have broken the law or otherwise acted improperly," the group said in a statement. It stressed instead that the database can help develop pictures of offshore networks that can be used to hide money. It allows users "to explore the relationships between clients, offshore entities and the lawyers, accountants, banks and other intermediaries who help keep these arrangements secret".

Some of the world's biggest offshore locales — the Cayman Islands, the Isle of Man, the British Virgin Islands (BVI), Bermuda — are either U.K. territories or Crown dependencies.

Countries rattled by tax-haven data leak
Politicians and companies worldwide face questions over offshore accounts

How Offshore Tax Havens Save Companies Billions
GE doesn't pay any taxes to America. Employees at Google's Dublin office relax underneath the Irish-themed Google logo. Shifting most of its overseas profits through the Dublin office has saved Google billions in taxes.
Google, Forest Laboratories and other companies shave billions off their taxes by shifting their revenue through countries with lower income tax rates, Bloomberg News reporter Jesse Drucker says. Estimates that America is missing up to 90 Billion tax dollars thannks to legal loopholes that they won't fix.
Reporter Jesse Drucker, who has written extensively about corporate tax-dodging, explains how companies like Google, Pfizer, Lilly, Oracle, Facebook and Microsoft have managed to reduce their tax rates by billions of dollars by taking advantage of offshore tax havens.
Google had saved $3.1 billion in taxes in the past three years by shifting the majority of its foreign profits into accounts in Ireland, the Netherlands and Bermuda using financial techniques called "the Dutch Sandwich" and "the Double Irish" arrangement. Basically, he says, Google credited its Irish office with the majority of its non-U.S. sales revenue — and then shuttled that money through various subsidiaries located in Ireland and other countries to save billions in taxes.

Bank Secrecy: Countries of Malta, Andorra, Liechtenstein, Andorra, Monaco, and San Marino

Liechtensteina is a tax haven for the world. From tax-free shopping to freedom from income taxes, countries like Liechtenstein, as well as Andorra, San Marino and Monaco, are attracting millions of tourists as well as business people and expatriates looking to take advantage of the favorable tax environment. And these tax benefits come in many shapes and sizes.
Liechtenstein's banks now have some of the strictest secrecy laws in the world, offering the wealthy a place to store money safely. Here's how it works: Once you open an account at one of these banks, no one except the person who establishes the account can ever have access to it. In fact, instead of a person's name, accounts more often use numbers and codes to make them even more anonymous. The banks will even give depositors the choice of having their mail sent to them or held at the bank itself, ensuring the IRS or any IRS-like government service won't be able to trace the bank account to anyone.
First and foremost, the countries have become a shopper's paradise. The value-added tax on most everything you buy in Europe is around 15 percent but these four countries impose little to no tax on any purchases. That tax-free status has drawn tourists and shoppers from every corner of the world to these small nations. Shops of every shape and size now abound, from luxury jewelry stores to car dealerships to electronic outlets.
Secondly, citizens of these countries pay no income tax and residents pay little or none, an incentive which has drawn many foreigners to try to establish residency there themselves. That's particularly useful for European citizens, who are only obliged to pay taxes in the country in which they reside. If, for instance, you are a resident of Germany but don't live there year-round, you don't have to pay taxes to the German government. If a German citizen can establish residency in Liechtenstein, the benefit is even greater because he will not have to pay any taxes at all. With demand for residency so strong these days, the governments of all four countries have made it increasingly difficult for outsiders to become residents. Still, the lack of income taxes is an irresistible draw, particularly for wealthy Europeans.
For U.S. citizens, of course, this is not an option.
The United States is the one country in the world with a tax law that says its citizens must pay taxes no matter where they live and earn their income for the year. In other words, if an American citizen lives and earns all his money in Ethiopia in 1999, the U.S. Treasury still expects him to pay taxes to the U.S.
While such secrecy used to be the domain of banks in countries like Switzerland and Luxembourg, pressure from the U.S., the European Union and the OECD have forced these banks to relax some of their rules, essentially opening their books for disclosure. (This has become a particularly public debate given the recent discoveries that many Swiss banks secretly held moneys deposited by the Nazis during the Holocaust.) In turn, banks in Switzerland have become less popular with wealthy people looking to shelter their money while the Liechtenstein banks are even more attractive. New 'offshore' banking areas are springing up all over the world, from the Caribbean Islands to Western Samoa. In fact, a study by the International Monetary Fund estimated the amount of money in offshore havens worldwide was $4.8 trillion in 1997, up from $3.5 trillion in 1992. Others estimate that number is closer to $8 trillion.

Maltese shell company helped launder millions in embezzled Spanish public funds

While in France, Mr Roca Samper had set up companies in the “tax havens of Andorra and Malta,” helping him evade justice for five years, according to Magistrate Silvia Vivó, who has formally requested his extradition.  The fugitive is believed to be the brains behind the misappropriation – often described by Spanish media as the “looting” – of some €23 million through Emarsa, a publicly-owned wastewater treatment company which was liquidated in 2010.

OFFSHORE AND BANKS THAT HIDE THE MONEY

Download and listen here. To hear previous Taxcasts, click here.

 

The tax haven in the heart of Britain

There is an institution with a murky history and remarkable powers that acts like a political and financial island within our island nation state. Welcome to the Square Mile and the City of London Corporation.

TREASURE ISLANDS

https://twitter.com/nickshaxson

11/21/13 Lobbyists for the havens: ICIJ's guide to the offshore system's defenders

Across the world, tax havens are under attack. Leading global organizations like the G20 and OECD have put cracking down on offshore tax avoidance at the top of their agendas. Ambitious plans for automatic sharing of tax data between countries are in the works.

But as ICIJ noted this week, reports of the demise of offshore tax havens have often been greatly exaggerated. Highly touted clampdowns in 2000 and 2009 yielded few results. In the last five years, two French presidents have vowed to wipe tax havens off the map entirely, but so far no one has come close to dealing a coup de grâce.

Offshore havens and tax avoidance have influential defenders who have lobbied hard to maintain the status quo. Many of the world’s biggest corporations, accounting firms and law firms are pushing back against the latest efforts to curb the use of offshore.  Much of the lobbying is not done by corporations themselves, but by little-known business associations that represent them. Google, General Electric and Mitsubishi may be household names, but the U.S. Council for International Business and Japan Foreign Trade Council draw little attention from the public. “They want to have these arguments made on their behalf by others, because they have been in the spotlight and under fire for these things,” Nicholas Shaxson, the author of Treasure Islands, a book critical of offshore secrecy, said of the corporations that belong to these lobby groups.

On 7 October 2002, an Anglican priest, William Campbell-Taylor, and an English-Jewish academic, Maurice Glasman, came to the law lords to challenge a parliamentary bill. It was the start of an episode that anyone worried about tax avoidance - or, for that matter, about the fate of the NHS, about economic inequality, about student loans, about capital flight from Africa, about global financial deregulation or about the political might of the financial sector - ought to know about. Yet there was little media interest.

The bill concerned the City of London Corporation, the local-government authority for the 1.2-square-mile slab of prime real estate in central London that is the City of London. The corporation is an ancient, semi-alien entity lodged inside the British nation state; a "prehistoric monster which had mysteriously survived into the modern world", as a 19th-century would-be City reformer put it. The words remain apt today. Few people care that London has a mayor and a lord mayor - but they should: the corporation is an offshore island inside Britain, a tax haven in its own right.

The term "tax haven" is a bit of a misnomer, because such places aren't just about tax. What they sell is escape: from the laws, rules and taxes of jurisdictions elsewhere, usually with secrecy as their prime offering. The notion of elsewhere (hence the term "offshore") is central. The Cayman Islands' tax and secrecy laws are not designed for the benefit of the 50,000-odd Caymanians, but help wealthy people and corporations, mostly in the US and Europe, get around the rules of their own democratic societies. The outcome is one set of rules for a rich elite and another for the rest of us.

The City's "elsewhere" status in Britain stems from a simple formula: over centuries, sovereigns and governments have sought City loans, and in exchange the City has extracted privileges and freedoms from rules and laws to which the rest of Britain must submit. The City does have a noble tradition of standing up for citizens' freedoms against despotic sovereigns, but this has morphed into freedom for money.

A few examples illustrate the carve-out. Whenever the Queen makes a state entry to the City, she meets a red cord raised by City police at Temple Bar, and then engages in a col­ourful ceremony involving the lord mayor, his sword, assorted aldermen and sheriffs, and a character called the Remembrancer. In this ceremony, the lord mayor recognises the Queen's authority, but the relationship is complex: as the corporation itself says: "The right of the City to run its own affairs was gradually won as concessions were gained from the Crown." The modern ceremony strikingly marks the political discontinuity at the City's borders.

The Remembrancer, whose position dates from the reign of Elizabeth I, is the City's official lobbyist in parliament, sitting opposite the Speaker, and is "charged with maintaining and enhancing the City's status and ensuring that its established rights are safeguarded". His office watches out for political dissent against the City and lobbies on financial matters. Then there is the City's Cash, "a private fund built up over the last eight centuries", which, among many other things, helps buy off dissent. Only part of it is visible: the Freedom of Information Act applies solely to its mundane functions as a local authority or police authority. Its assets are beyond proper democratic scrutiny.

The City Corporation is different from any other local authority. Here, hi-tech global finance melds into ancient rites and customs that underline its separateness and power with mystifying pomp. Among the City's 108 livery companies, or trade associations, you will find the WorshipfulCompanies of Loriners (concerned with stirrups and other harnesses for horses) and Fletchers (arrow-makers) as well as the Worshipful Company of Tax Advisers, among whose four prime aims is "to support the Lord Mayor and the City of London Corporation", and the Worshipful Company of International Bankers, whose heraldic "supporters" are the griffins, guardians of treasure.

The carve-outs that the City's grandees have created are astonishing. One of the biggest relates to the bill that came before the law lords on a chilly day in October 2002. Sitting in the Café Churchill on Parliament Street, Glasman used sugar sachets and teaspoons to reconstruct the scene for me. Apart from a couple of brave, independent-minded Labour MPs, notably John McDonnell, nobody supported Glasman and Campbell-Taylor to challenge the bill. Such is the fear that the corporation inspires in parliament.

Campbell-Taylor - a handsome and articulate Oxbridge-educated priest - probably felt more at home than Glasman in front of the assorted City scriveners, aldermen and barristers. Glasman has thick, tousled black hair, horn-rimmed glasses and an easy, slightly dishevelled charm. Born in 1961, a grandchild of eastern European refugees from the Holocaust, he was educated at a rough north London comprehensive but won an exhibition to read history at Cambridge. He bunked off lectures, took up the trumpet and joined a band, the Ashtrays, though the big break never came. "I had to do a reckoning with who I was," he told me. "I thought for a long time that it was women I was interested in. But I was having a lot of anxiety: I thought it was because I was with the wrong women. Eventually I realised it was political work and academic engagement that made me happy. I had made a simple category error."

He took on various academic posts and wrote a book called Unnecessary Suffering, about the Solidarity movement in Poland. In 1995, he took a job at Guildhall University, where he made friends with Campbell-Taylor, the chaplain. Campbell-Taylor first properly encountered the corporation through a campaign called Spitalfields Market Under Threat (Smut), confronting a property development on the fringes of the City. They were astonished to find that the corporation was a big shareholder in the development - a public authority acting as a private company, outside its jurisdiction. They resolved to find out more. Campbell-Taylor got himself elected as a City ward councillor, running on a campaign to save a school. Once inside, he discovered the matter that would take him to the law lords.

The slavery franchise

Over the centuries, reformers in Britain have tried, and failed, to have the corporation merged into a unified London authority. The political landscape heaved and shifted around it, but the City stood immune. As the Times noted in 1881, "The City Corporation is sacred although nothing else is."

For much of the 20th century, the Labour Party had a pledge in its manifesto to abolish the corporation. In 1917, Peter Mandelson's grandfather Herbert Morrison, a rising star in Labour ranks, put the party's antipathy plainly. "Is it not time London faced up to the pretentious buffoonery of the City of London Cor­poration and wipe it off the municipal map?" he asked. "The City is now a square mile of entrenched reaction, the home of the devilry of modern finance."

Clement Attlee took up the baton in 1937. "Over and over again we have seen that there is in this country another power than that which has its seat at Westminster," he said. "Those who control money can pursue a policy at home and abroad contrary to that which has been decided by the people." Freedom for money can lead to bondage for ordinary people. Labour never did abolish the corporation; instead, the Greater London Council was abolished in 1986 under Margaret Thatcher. In 1996, Tony Blair got Labour to replace its pledge to abolish the corporation with a promise merely to "reform" it. This was the suggestion before the law lords in 2002 - and it was an astonishing gift to the corporation.

Like any other local authority, the City of London is divided into wards. These elect candidates to serve on the Court of Common Council, the City's principal decision-making body. Unlike any other local authority, however, individual people are not the only voters: businesses can vote, too. Political parties are not involved - candidates stand alone as independents - and this makes organised challenge to City consensus all but impossible.

Before 2002, the 17,000 business votes (only business partnerships and sole traders could take part) already swamped the 6,000-odd residents. Blair's reforms proposed to expand the business vote to about 32,000 and to give a say, based on the size of their workforce in the Square Mile, to international banks and other big players. Voting would reflect the wishes not of the City's 300,000 workers, but of corporate managements. So Goldman Sachs and the People's Bank of China would get to vote in what is arguably Britain's most important local election.

The City called the reforms "radical change that is essential to keep a world-class financial centre". Glasman called it the "biggest retrograde step since Magna Carta". These workers did not have control of their own votes - the reform programme was comparable, he said, to the voting rights of chattel owners in the pre-war American South: the slavery franchise.

When the reforms came before the Lords, Tom Simmons, chief executive of the corporation, outlined the heft and the outlandish nature of this primeval quasi-British institution. "The corporation emerged from a 'missed time' and there is no direct evidence of it coming into existence," he said. "There is no charter that constituted the corporation as a corporate body." City people joke that it dates its "modern period" from 1067, the year when William the Conqueror "came friendly" to the City and let it keep its ancient rights as he subdued the rest of the country.

This "missed time" is significant, Glasman says, because it means the City's rights pre-date the construction of modern political Britain, and this has placed it outside parliament's normal legislative remit. The City evolved as an institution not so much subordinate to parliament, or the church, or the Crown, but adjacent to and intertwined with them in complex relationships. It is the carve-out again.

Selling England by the offshore pound: astonishing new interactive map
Private Eye has revealed the extent of ownership of British land by offshore companies, generally for tax avoidance and often to conceal dubious wealth. Now the Eye has created an easily searchable online map of these properties, revealing for the first time the British property interests of companies based in tax havens from Panama to Luxembourg, and from Liechtenstein to the South Pacific island of Niue. Using Land Registry data released under Freedom of Information laws, and then linking more than 100,000 land title register entries to specific addresses, the Eye has tracked all leasehold and freehold interests acquired by offshore companies between 2005 and 2014.
Perhaps the most prominent such family are the Harmsworths, whose male heirs became Lords Rothermere a century ago and now run the newspaper dynasty behind the Daily Mail. The empire is controlled by the family through a Bermudan company itself owned by a series of trusts. The 3rd Lord Rothermere, Vere Harmsworth, became a tax exile in the 1970s, bequeathing the opportunity to claim “domicile” status in France to his son and current Lord Rothermere, Jonathan.  The setup allows not just the multi-billion-pound business interests led by the patriotic Mail to be passed on inheritance tax-free, but also substantial property interests when held offshore. So tracts of farmland in Dorset are now owned by Harmsworth Trust Company (PTC) Ltd in the British Virgin Islands, while even a space in an underground Kensington car park near the Mail offices is owned by Harmsworth Holdings Ltd in St Lucia.

The Offshore City

The corporation's part-escape from Britain is just one element of the offshore story. It is no coincidence that the capital of what was once the world's greatest empire - with the City as "governor of the imperial engine", as the historians P J Cain and A G Hopkins put it - has become the centre of a big part of the modern global offshore system.

As my book Treasure Islands describes in detail, the Bank of England, lodged in the heart of the City (but not, it has to be said, regulated by it), in effect encouraged tax havenry in British outposts of the Caribbean and elsewhere. By the 1980s, the City was at the centre of a great, secretive financial web cast across the globe, each of whose sections - the individual havens - trapped passing money and business from nearby jurisdictions and fed them up to the City: just as a spider catches insects. So, a complex cross-border merger involving a US multinational might, say, route a lot of the transaction through Caribbean havens, whose British firms will then send much of the heavy lifting work, and profits, up to the City.

The Crown dependencies of Jersey, Guern­sey and the Isle of Man, which focus heavily on European business, form the web's inner ring. In the second quarter of 2009, Jersey alone provided £135bn in bank deposits upstreamed to the City. Jersey Finance, the tax haven's promotional body, puts the relationship plainly: "Jersey is an extension of the City of London."

The next ring of the web contains the British overseas territories, such as the Cayman Islands and Bermuda. Like the Crown dependencies, they have governors appointed by the Queen and are controlled by Britain in myriad ways, but with enough distance to allow Britain to say "There is nothing we can do" when it suits.

The web's outer ring contains an assortment of havens, such as Mauritius in the Indian Ocean, Hong Kong and the Bahamas, which Britain does not control but which still feed billions in business to the City from around the world.

So, the corporation has two main claims to being a tax haven: first, as a semi-alien entity, floating partly free from Britain (just as the Cayman Islands are), and second, as the hub of a global network of tax havens sucking up offshore trillions from around the world and sending it, or the business of handling it, to London. These are possibly the biggest reasons for the City's wealth and power - yet how many Britons understand this?

“Don't tax or regulate us or we'll move to Switzerland," the bankers and hedgies cry; and all too often the politicians quail and cut taxes on the wealthy, deregulate finance further, and hand yet more freedoms to the City.

Nearly every multinational corporation has offshore subsidiaries (not counting those in Lon­don) - and the biggest users of offshore finance are banks. Financial Mail recently counted over 550 offshore subsidiaries just for Barclays, RBS and Lloyds - each of which far outstrips any other multinational. This isn't just about tax: banks go offshore to escape certain financial regulations, and can grow faster as a result. So, offshore is a big part of the Too Big To Fail story - another element strengthening the City's power through the grip these banks have on our elected leaders and boosting the breathtaking chutzpah of the Barclays chief executive, Bob Diamond, who told the UK Treasury select committee on 11 January that he didn't know how many offshore subsidiaries his bank had, and that the "period of remorse and apology" for banks should now end.

The corporation loves financial deregulation - globally. Deregulation is a bit like shaking (or, perhaps more accurately, removing a net from) a tree full of insects: the more you do it, the more business floats around, ready to be caught in the nearby web. As such, it is hardly surprising that the Lord Mayor of London is evan­gelical about it. In fact, his role is officially, as the City explains, to "expound the values of liberalisation" and provide "support for innovation, proportionate taxation and regulation". (On his 20-odd foreign trips a year, he makes clear that "proportionate" means "limited".) Not only that, but the Lord Mayor and colleagues promise to "take up cudgels on behalf of the City anywhere in the world on any subject which is of concern to the City".

Thus, the role of the City of London Corporation as a municipal authority is its least important attribute. This is a hugely resourced international offshore lobbying group pushing for international financial deregulation, tax-cutting and tax havenry around the world.

Divided capital

In the end, the bill on extending the corporate vote passed, carried on a Labour majority. Glasman's and Campbell-Taylor's challenge failed, although they won a small victory - that the process for choosing business electors be "open and clear". Campbell-Taylor now works in a small parish in north London; Glasman has risen from relative obscurity to become a leading thinker for the Labour Party - and was recently ennobled for this by Ed Miliband.

It is easy to be daunted by the City and the offshore system. Some reviewers of Treasure Islands were so disturbed by the scale of it - Peter Preston's defeatist review in the Guardian is a case in point - that they advocated, in effect, capitulation. Given that the financial services sector has just been exposed as having provided over half of the Conservative Party's funding last year, and that the Chancellor of the Exchequer, George Osborne, has just urged Britain to move from "retribution to recovery" over the banks, reform looks distant.

But the doubters are wrong. Yes, we still need a vision of how to confront the corporation and its offshore satellites. Few people in Britain can see the corporation, let alone understand its importance. However, widespread public education, a precursor to reform, can now begin. One of the biggest, most silent players behind so much offshore activity has been identified: a Teflon-like, medieval institution, wrapped around the neck of Britain and dedicated to keeping finance strong and free.

Already I see efforts around the world to constrain the offshore system that feeds the City. UK Uncut, the spontaneous protest movement opposing offshore tax avoidance by multinationals, has had an impact and now pledges to move against the banks. A big "One London" campaign to merge a divided capital into a single democratic entity may seem far off, but groups such as London Citizens are now thinking about the fairer division of London. The Tax Justice Network, and others, are helping build an intellectual edifice for understanding tax havens. Some of their goals - such as country-by-country reporting by multinationals - are already being partly met. The unions, too, and big NGOs, especially those working in international development, are engaging with the matter. An anti-haven mobilisation is under way in France; something similar may be starting in the US. The IMF, the Organisation for Economic Co-operation and Development, the EU and other agencies are now at least debating issues they ignored before. Around the world, legislators, regulators and ordinary people are starting to see the toxicity of Britain's role in protecting offshore business that drains billions out of developing countries each year.

The City of London Corporation - this heart cut out from the body of our vibrant, multicultural metropolis - is no longer so invisible. Now we must figure out what to do about it.

Nicholas Shaxson's book "Treasure Islands" is published by Bodley Head (£14.99)

From the Guardian: The cyber-intelligence complex and its useful idiots Barrett Brown
http://www.guardian.co.uk/commentisfree/2013/jul/01/cyber-intelligence-complex-useful-idiots

Louis V. Gerstner Jr. lays out his post-IBM life
http://articles.washingtonpost.com/2013-06-07/business/39803388_1_computer-giant-ibm-gerstner-jr-life

wiki: http://en.wikipedia.org/wiki/Louis_V._Gerstner,_Jr

After IBM, becomes Chairman of another large private equity company Carlyle Group
http://en.wikipedia.org/wiki/Carlyle_Group

For something different, which then does private equity buyout of Booz Allen Hamilton
http://en.wikipedia.org/wiki/Booz_Allen_Hamilton

Booz Allen, the World's Most Profitable Spy Organization (and in the middle of Snowden controversy)
http://www.businessweek.com/articles/2013-06-20/booz-allen-the-worlds-most-profitable-spy-organization

For-profit companies privatizing intelligence

Spies Like Us: http://www.investingdaily.com/17693/spies-like-us/

Private contractors like Booz Allen now reportedly garner 70 percent of the annual $80 billion intelligence budget and supply more than half of the available manpower.
<snip>

Spying on the EU is an exercise in futility: well there is economic espionage (and the for-profit companies running intelligence)
http://blogs.telegraph.co.uk/news/concoughlin/100224120/spying-on-the-eu-is-an-exercise-in-futility/

 

How Much Are the NSA and CIA Front Running Markets?
http://www.nakedcapitalism.com/2013/06/how-much-are-the-nsa-and-cia-front-running-markets.html

Part of the long winded details of tax havens and money laundering Treasure Islands:
Uncovering the Damage of Offshore Banking and Tax Havens
http://www.amazon.com/Treasure-Islands-Havens-Stole-ebook/dp/B004OA6420/

competition between the US and Britain in the race to the bottom for tax haven secrecy and money laundering.