by Paul Wiseman and Marcy Gordon
WASHINGTON (AP) – Calls grew on Monday to end financial secrecy, which has allowed many of the world’s richest and most powerful people to hide their wealth from tax collectors.
An uproar came after a report emerged that world leaders, billionaires and others have used shell companies and offshore accounts over the past quarter to hold trillions of dollars out of state coffers, to help the poor or combat climate change. resources have been limited. .
The report from the International Consortium of Investigative Journalists made promises of tax reform and calls for resignation and investigation, as well as clarification and denial from those targeted.
The investigation, called the Pandora Papers, was published on Sunday and involved 600 journalists from 150 media outlets in 117 countries.
Hundreds of politicians, celebrities, religious leaders and drug dealers have used mask companies or others to hide their wealth and investments in mansions, exclusive beachfront properties, yachts and other properties, according to a review of nearly 12 million files obtained from 14 firms located in strategy is used. Worldwide.
“The Pandora Papers is about individuals using privacy jurisdictions that we would call tax havens when the goal is to avoid taxes,” said Steve Wammhoff, director of federal tax policy at the Left-leaning Institute on Taxation and Economic Policy in Washington. . .
Tax evasion can be legal.
Gabriel Zuckman, a University of California, Berkeley, economist who studies income inequality and taxes, said in a statement that one solution is “obvious”: ban “shell companies — corporations with no economic substance, whose sole purpose is taxes or other taxes.” The laws have to be avoided.
“Legitimate is the true scam,” activist and science-fiction author Cory Doctorow wrote on Twitter. “Each of these arrangements represents an unimaginable fantasy: a shell company is a business, a business is a person, that person lives in a file-drawer in a bank officer’s desk on a distant treasure island.”
The more than 330 current and former politicians identified as beneficiaries of the secret accounts include King Abdullah II of Jordan, former UK Prime Minister Tony Blair, Prime Minister of the Czech Republic Lady Babis, Kenyan President Uhuru Kenyatta, Ecuadorian President Guillermo Lasso. And both include Pakistani allies. Prime Minister Imran Khan and Russian President Vladimir Putin.
Some of those targeted vehemently denied the claims.
Oxfam International, a British consortium of charities, commended the Pandora Papers for highlighting brazen examples of greed that deprive countries of tax revenues that can be used to fund programs and projects for the greater good. could.
“This is where our missing hospital is located,” Oxfam said in a statement. “This is where the pay-packet is all the extra teachers and firefighters and public servants need.”
The European Commission, the executive arm of the 27-nation EU, said in response to the revelations that it was preparing new legislative proposals to increase tax transparency and strengthen the fight against tax evasion.
The Pandora Papers are a follow-up to a similar project released in 2016, called the “Panama Papers,” compiled by the same journalist group.
The latest blast is even more detailed, relying on leaked data from 14 different service providers doing business in 38 different jurisdictions. Records date back to the 1970s, but most are from 1996 to 2020.
Accounts registered in familiar offshore shelters, including the British Virgin Islands, Seychelles, Hong Kong and Belize, were investigated. But some were also in trusts established in the US, including 81 in South Dakota and 37 in Florida.
The documents reveal how powerfully anonymous shell companies, trusts and other artifacts have been able to be deployed by people to conceal the real owners of corrupt or illegal assets. For example, legally sanctioned trusts can be subject to abuse by tax evaders and fraudsters, offering privacy and autonomy comparable to traditional business entities.
Shell companies, a preferred tax evasion vehicle, are often layered in complex networks that hide the identities of the beneficial owners of assets – those who ultimately control, or financially benefit from, an offshore company or other asset, while others The names of the people are listed in the registration document. The report said, for example, that an offshore company was used to buy a $4 million Monaco apartment for a woman who allegedly had a secret relationship with Putin.
While a for-profit owner may be required to pay taxes in the home country, it is often difficult for authorities to ascertain that an offshore account exists, especially if offshore governments do not cooperate.
A Treasury Department agency working on new rules for a US for-profit ownership directory is debating whether partnerships, trusts and other business entities should be included. Transparency advocates say they should, or else criminals will invent new kinds of paper companies to slip through the cracks.
International bodies such as the G7 group of the wealthiest countries and the Financial Action Task Force have launched initiatives to improve ownership transparency in recent years, but efforts have progressed at a modest pace.
Pointing to the secrecy behind many tax evasion, some critics are calling for a global wealth registry that would make fake investments in shell companies public, embarrassing politicians or celebrities who worry about their reputations.
In the US, the House passed legislation this summer that would require multinational corporations to publicly disclose their tax payments and other key financial information on a country-by-country basis. Anti-money laundering and corporate transparency measures were incorporated into Defense Department funding legislation; It has not yet been implemented by the Treasury Department.
The Biden administration is also pushing US banks to require them to report customers’ account information to the IRS as part of a $3.5 trillion economic and social spending package before Congress. Treasury Secretary Janet Yellen and other officials say it is an important way to prevent tax evasion by wealthy individuals and companies, but it has raised strong opposition from banking industry groups and Republican lawmakers, who maintain, breach and create undue liability for the banks.
Tax havens have already come under a lot of scrutiny this year.
In July, negotiators from 130 countries agreed on a global minimum tax of at least 15% to prevent large multinational corporations from reducing taxes by shifting profits from high- to low-tax jurisdictions such as Bermuda and the Cayman Islands. The details of the plan are yet to be worked out by the Paris-based Organization for Economic Cooperation and Development; It should take effect in 2023.
And while the plan would cover giant multinational corporations, it would not cover the shell companies and other entities behind the plans described in the Pandora Papers.
Associated Press writers Stan Cho in New York and John Rice in Mexico City contributed to this report.