Mon | Aug 20, 2018

Don't sully offshore world

Published:Saturday | April 9, 2016 | 12:00 AM


I am disgusted by the Panama Papers exposÈ, as the information was obtained by criminal hacking into the data of a private law firm. Journalists are having a feeding frenzy on the idea that they have an insider's view of the offshore world. The very word 'offshore' suggests secrecy, glamour and intrigue, and journalists just cannot get enough.

The rather boring reality is that individuals and corporations with tax liabilities in multiple jurisdictions will always use corporate structures in low- and no-tax jurisdictions to rationalise and bring order to their tax liability. Of course, the corporate structures are used to minimise tax liability, so as to increase profits, but this is in keeping with obligations to shareholders.

Besides, it is the complex and impene-trable tax laws of Organization of Economic Cooperation and Development countries that provide the loopholes through which offshore structures function, legally, for tax minimisation purposes. All attempts to reform the laws in those countries fail, because governments rely on tax accountants and tax lawyers to guide them in establishing laws to deal with offshore structures and the former serve the interests of their clients in helping the governments.

Unfortunately, individuals who have no business in the offshore world, such as politicians from kleptocracies, worm their way in and cast a negative light on legitimate and legal international tax rationalisation and minimisation schemes.