What’s at stake in the ‘Pandora Papers’ leak, and are the Bahamas in trouble?

Providing transparency about offshore tax havens can complicate the economic and political agendas of several large U.S. companies like Amazon, Microsoft and Google, as well as politicians like Sen. Ron Wyden, D-Ore. But governments…

What’s at stake in the ‘Pandora Papers’ leak, and are the Bahamas in trouble?

Providing transparency about offshore tax havens can complicate the economic and political agendas of several large U.S. companies like Amazon, Microsoft and Google, as well as politicians like Sen. Ron Wyden, D-Ore.

But governments have not stopped criticizing the corporations for their use of a variety of secretive places in the tax haven world such as the Netherlands, the British Virgin Islands and Luxembourg, which has the highest corporate tax rate in the world — and the easiest for firms to use.

President Donald Trump has opened investigations into all three countries, the Associated Press reported last month.

And though the broad use of what’s known as the “Pandora Papers” by the Irish government has left the Irish government at odds with its European partners, it appears to be just beginning to question the use of the Bahamas as a tax haven for multi-nationals, even when linked to companies the Irish government considers vulnerable to the European Union’s 301 anti-tax-evasion order.

What is the Pandora Papers?

Since 2016, the Irish government has been exchanging financial documents with a group of financial institutions and multinational corporations that have a significant number of complex accounts held by anonymous corporations in the Bahamas, Bermuda and elsewhere.

“Most of the companies in that list have huge cross-border businesses and use tax havens to minimize their tax bill. Governments need to recognize this is a real issue and enforce the law,” said Marian Cross, project manager for Dutch Wake – a group that runs an international coalition of tax havens watchdog NGOs — in 2016.

The list is called the “Panda Papers,” due to its resemblance to “Panda” — an animal prized for its small body, small eyes and even smaller incisors.

While many large international corporations are listed on the list, at least five leaders are named — Amazon, Google, Microsoft, Alliance Boots, and YouTube — along with Alliance Boots, which is the financial and logistics company that is a major investor in the British pharmacy chain Boots.

Along with Amazon, Google and Microsoft, Alliance Boots and Google are deemed vulnerable to the European Union’s 301 anti-tax-evasion order.

What are the worst offenders?

The Financial Times’ Peter Hammer wrote in a recent investigation that the Bahamas “has turned into a haven for $6.5 trillion worth of assets held in bearer shares, billions of dollars of British Virgin Islands property and tens of billions of euros of earnings.”

Some of those assets, Hammer wrote, are hidden behind “paper trails” that combine things like shell companies and trusts with paper that only the owners can see.

What have the Netherlands, Malta and Belgium done?

So far, the Netherlands, Malta and Belgium have taken steps to try to end the use of Dutch and Belgian accounts as tax havens, but no similar changes have been made in relation to the Bahamas.

Former U.S. Treasury Secretary Jacob Lew, who announced the 309-count indictment against European billionaires called the “Swiss Leaks” and worked in close collaboration with officials in the Netherlands, said earlier this year that we could see a “sugar daddy” tax on huge banks that allow businesses to protect their profits and hide them offshore.

“We haven’t had major reforms to address some of the structural problems [in Europe],” Lew said. “We want to see this happening.”

For Wyden, the solution starts with transparency. He said “shame on those countries that benefit from such schemes … They should act as the plug-holes that Congress’ prohibition on offshore tax avoidance is designed to fix.”

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