The richest people use tax havens to evade most taxes, and most people don't know what's going on

The richest people use tax havens to evade most taxes, and most people don’t know what’s going on

A week ago, Aftenposten/E24 and several international papers published new findings from another tax haven leak, this time Pandora’s Papers. Guttorm Schjelderup is one of the leading experts on taxation and tax havens. He heads the Norwegian Tax Center and is a professor at the Norwegian School of Management.

For him, there is nothing new in Pandora’s leak. It appears that the economic and political elite are benefiting from tax havens, as previous major leaks have shown.

– It is not surprising, because resources are needed to use these structures. The man on the street has no way of that. Through research, we know that the richest people avoid the most taxes by using tax havens.

Most people don’t know what’s going on either, so we don’t see a huge grassroots movement against this.

Gutturm Schgelderup, President of the Norwegian Tax Center

In every nook and cranny of the planet

Exploratory journalists have spent years in various countries working with leaks from tax havens through the International Consortium of Investigative Journalism, the International Consortium of Investigative Journalism. They believe that the word tax havens reminds many people of a remote island with palm trees, and everything seems so far fetched.

“Pandora’s Papers show that this is a money machine that operates in every corner of the planet,” the International Consortium of Investigative Journalists said. In an article on their website.

The main players, according to the ICIJ, are prestigious institutions such as multinational banks, law firms, and accounting firms that are headquartered in the United States and Europe.

Childerup emphasizes that tax havens are often small states with small populations. The population of the British Virgin Islands is 30-40 thousand people, but there are more than 1 million joint-stock companies. While Norway has a population of 5.5 million, Schildrup expects the number of public limited companies to be less than 500,000.

Virgin Islands does not have the resources to monitor or serve users. Many facilities are made through the City of London. Since the most famous financial centers are closely involved and mean a lot to the value of creativity, these countries have little incentive to do anything about secrecy. Most people don’t know what’s going on either, so we don’t see a huge grassroots movement against this.

Pandora Lake

  • On Sunday, October 3, the International Consortium of Investigative Journalists released him pandora leaves, which shows how the financial system benefits the world’s richest and most powerful. 12 million documents reveal how 35 former and current heads of state and 300 government employees amassed their fortunes and ran their businesses through tax havens.
  • According to Aftenposten, Pandora’s papers reveal the true owners of 29,000 anonymous businesses, numerous bank accounts, private planes, luxury boats, antiques, villas and exclusive artwork.
  • Source: NTB

hurt the economy

Schjelderup has written articles on the adverse effects of tax havens on the economy. Businesses and individuals remind that it is essential to use tax havens because they provide a very good legal framework that banks and investors will accept.

When the framework is this large, it also boosts economic growth. Hence those operating locally in the tax haven should be able to use it as well. But this is not allowed. The legal framework aims to increase confidentiality and protect the interests of investors.” writes Schjelderup.

The United Nations Nature Commission decided that addressing the issue of tax havens is critical to the success of the restructuring needed to take care of nature and the climate, which in turn is vital to the economy.

The world’s most powerful countries and the economic and political elite depend on tax havens.

Gutturm Schgelderup, President of the Norwegian Tax Center

– Confidentiality is a problem

Norwegian Childrup Red capital adequacy which in 2009 highlighted the amount of money that disappears from developing countries through corruption and secrecy, and that is hidden through the use of tax havens.

What arguments against tax havens should governments and politicians consider more?

Secrecy and legislation targeting people who do not live in tax havens is a problem. Why should we accept that tax havens offer legislation so harmful that those who use it are not allowed to work in tax havens – hence the name letterbox companies? Schgelderup asks.

He believes that if the law on PO Box companies is appropriate for the country in which the address is located, he will be allowed to use the address there.

Since international investors who set up companies in tax havens are not allowed to do business in tax havens themselves, tax havens do not have to control these companies. They do not need to request company account registration and property information common in other countries. This makes it difficult for us to control what is happening. Schgelderup says Norges Bank would have known about the Nikolai Tangen structures if Tangen himself had not provided information.

When a storm surrounded the appointment of Nikolai Tangin as central bank governor, one problem was his use of tax havens. Norges Bank’s Supervisory Board regretted that Tangen’s property interests and personal finances were not clarified prior to the appointment, writing in a letter that “full transparency about companies located in tax havens is a matter of residual.”

The strongest depend on tax havens

Does it make sense to liquidate tax havens?

No, because the world’s most powerful countries and the economic and political elite depend on tax havens.

What can be done to move the system in a way that minimizes harmful effects?

You could argue that the laws that tax havens provide to foreign investors also apply to those who live and work in tax havens, says Schieldrop.

They use tax havens

  • Some of the 35 heads of state and more than 300 politicians who have revealed the use of tax havens through the Pandora leak: former British Prime Minister Tony Blair, Dutch Finance Minister Wupke Hoegstra, Kenyan Prime Minister Uhuru Kenyatta, and the President of Gabon, Ali Bongo and the Pakistani. Finance Minister Shavkat Tarin, Ukrainian President Volodymyr Zelensky, Mohammed bin Rashid Al Maktoum, Prime Minister of the United Arab Emirates. Read the list on E24.
  • Aftenposten / E24 . found 300 Norwegians in a tax haven in Pandora. These include hairdressers, ship owners, professional drivers, lawyers, and investors. Most people own unknown companies in tax havens and have assets there.

He also notes that the Organization for Economic Co-operation and Development, and the Organization for Economic Co-operation and Development, have passed a requirement for an effective global tax floor of 15 percent to help close tax havens. One concern Childdrop sees is that tax havens, as small states, do not have the ability to audit and tax companies on their business records.

Corporations do not pay taxes, so today there is no public oversight of tax havens. How this will work remains to be seen. Scheldrop says it’s also an open question how the OECD will be able to ensure compliance, especially in countries that have not agreed to the plan.

Journalistnettverket ICIJ

  • The International Consortium of Investigative Journalists (ICIJ) is a network of more than 280 journalists from graves around the world. The International Consortium of Investigative Journalists is headquartered in Washington.
  • It works with more than 100 media outlets, including Aftenposten, BBC, The New York Times and The Guardian.
  • The Panama Papers received significant attention from the first cases, which were published in April 2016 and much later. 376 journalists worked on 11.5 million documents on the central role of tax havens in the global financial sector.
  • In 2017, the International Consortium of Investigative Journalists released the Paradise Papers, which exposed the financial secrets of tax havens, including politicians, royals and a number of well-known global corporations.
  • In 2020, Fincen submitted 2,100 reports of suspicious transactions from US banks, and Fincen reached the US company Ecocrime.
  • Source: NTB

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