tag:theconversation.com,2011:/uk/topics/paradise-papers-45854/articlesParadise Papers – The Conversation2023-02-23T19:57:31Ztag:theconversation.com,2011:article/2000342023-02-23T19:57:31Z2023-02-23T19:57:31Z$1 trillion in the shade – the annual profits multinational corporations shift to tax havens continues to climb and climb<figure><img src="https://images.theconversation.com/files/512027/original/file-20230223-2492-ja174s.jpg?ixlib=rb-1.1.0&rect=45%2C32%2C1033%2C685&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption">Looks like paradise – especially if you're a multinational corporation in need of a tax haven.
</span> <span class="attribution"><a class="source" href="https://www.gettyimages.com/detail/photo/relaxing-on-hammock-after-a-beach-day-in-the-royalty-free-image/897476216?phrase=cayman%20islands">LeoPatrizi/E+ via Getty Images</a></span></figcaption></figure><figure class="align-center ">
<img alt="" src="https://images.theconversation.com/files/512024/original/file-20230223-18-7m6a9x.png?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/512024/original/file-20230223-18-7m6a9x.png?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=255&fit=crop&dpr=1 600w, https://images.theconversation.com/files/512024/original/file-20230223-18-7m6a9x.png?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=255&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/512024/original/file-20230223-18-7m6a9x.png?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=255&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/512024/original/file-20230223-18-7m6a9x.png?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=321&fit=crop&dpr=1 754w, https://images.theconversation.com/files/512024/original/file-20230223-18-7m6a9x.png?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=321&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/512024/original/file-20230223-18-7m6a9x.png?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=321&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px">
<figcaption>
<span class="caption"></span>
<span class="attribution"><a class="license" href="http://creativecommons.org/licenses/by-nc-nd/4.0/">CC BY-NC-ND</a></span>
</figcaption>
</figure>
<p>About a decade ago, the world’s biggest economies <a href="https://www.oecd.org/g20/summits/los-cabos/">agreed to crack down</a> on multinational corporations’ abusive use of tax havens. This <a href="https://doi.org/10.1787/23132612">resulted in a 15-point action plan</a> that aimed to curb practices that shielded a large chunk of corporate profits from tax authorities.</p>
<p>But, according to our estimates, it hasn’t worked. Instead of reining in the use of tax havens – countries such as the Bahamas and Cayman Islands with very low or no effective tax rates – the problem has only gotten worse. </p>
<p><a href="https://doi.org/10.35188/UNU-WIDER/2022/254-6">By our reckoning</a>, corporations shifted nearly US$1 trillion in profits earned outside of their home countries to tax havens in 2019, up from $616 billion in 2015, the year before the <a href="https://doi.org/10.1787/23132612">global tax haven plan was implemented</a> by the group of 20 leading economies, also known as the G-20. </p>
<p><a href="https://doi.org/10.35188/UNU-WIDER/2022/254-6">In a new study</a>, we measured the excessive profits reported in tax havens that cannot be explained by ordinary economic activity such as employees, factories and research in that country. Our findings – which you can explore in more detail along with the data and an interactive map in <a href="https://missingprofits.world">our public database</a> – show a striking pattern of artificial shifting of paper profits to tax havens by corporations, which has been relentless since the 1980s. </p>
<h2>Global crackdown</h2>
<p>The current effort to curb the legal corporate practice of using tax havens to avoid paying taxes began in June 2012, when world leaders at the <a href="https://www.oecd.org/g20/summits/los-cabos/">G-20 meeting in Los Cabos, Mexico</a>, agreed on the need to do something.</p>
<p>The Organization for Economic Cooperation and Development, a group of 37 democracies with market-based economies, <a href="https://doi.org/10.1787/23132612">developed a plan that consisted</a> of 15 tangible actions it believed would significantly limit abusive corporate tax practices. These included creating a single set of international tax rules and cracking down on harmful tax practices.</p>
<p>In 2015, the G-20 adopted the plan officially, and implementation began across the world the following year.</p>
<p>In addition, following leaks like the <a href="https://www.icij.org/investigations/panama-papers/">Panama Papers</a> and <a href="https://www.icij.org/investigations/paradise-papers/">Paradise Papers</a> – which shed light on dodgy corporate tax practices – public outrage led <a href="https://www.irs.gov/newsroom/tax-cuts-and-jobs-act-a-comparison-for-businesses">governments in the U.S.</a> and Europe to initiate their own efforts to lower the incentive to shift profits to tax havens. </p>
<h2>Profit-shifting soars</h2>
<p><a href="https://doi.org/10.35188/UNU-WIDER/2022/254-6">Our research shows</a> all these efforts appear to have had little impact. </p>
<p>We found that the world’s biggest multinational businesses shifted 37% of the profits – or $969 billion – they earned in other countries (outside the headquarter country) to tax havens in 2019, up from about 20% in 2012 when G-20 leaders met in Los Cabos and agreed to crack down. The figure was less than 2% back in the 1970s. The main reasons for the large increase were the growth of the tax avoidance industry in the 1980s and U.S. policies that made it easier to shift profits from high-tax countries to tax havens.</p>
<p><iframe id="wP1wk" class="tc-infographic-datawrapper" src="https://datawrapper.dwcdn.net/wP1wk/3/" height="400px" width="100%" style="border: none" frameborder="0"></iframe></p>
<p>We also estimate that the amount of corporate taxes lost as a result reached 10% of total corporate revenue in 2019, up from less than 0.1% in the 1970s. </p>
<p>In 2019, the total government tax loss globally was $250 billion. U.S. multinational corporations alone accounted for about half of that, followed by the U.K. and Germany.</p>
<p><iframe id="FUJ51" class="tc-infographic-datawrapper" src="https://datawrapper.dwcdn.net/FUJ51/4/" height="400px" width="100%" style="border: none" frameborder="0"></iframe></p>
<h2>Global minimum tax</h2>
<p>How do policymakers fix this?</p>
<p>So far, the world as a whole has been trying to solve this problem by cutting or scrapping corporate taxes, albeit in a very gradual way. In the past 40 years, the global effective corporate tax rate <a href="http://globaltaxation.world/">has fallen from 23% to 17%</a>. At the same time, governments have relied more heavily on <a href="https://gabriel-zucman.eu/files/PikettySaezZucman2022RKT.pdf">consumption taxes</a>, which are regressive and tend to increase income inequality.</p>
<p>But the root cause of profit-shifting is the incentives involved, such as generous or lenient corporate tax rates in other countries. If countries could agree on a <a href="https://www.jstor.org/stable/24437292">global minimum corporate tax rate</a> of, say, 20%, the problem of profit-shifting would, in our estimation, largely disappear, as tax havens would simply cease to exist. </p>
<p>This type of mechanism is exactly what more than <a href="https://www.oecd.org/newsroom/130-countries-and-jurisdictions-join-bold-new-framework-for-international-tax-reform.htm">130 countries signed onto in 2021</a>, with implementation of a 15% minimum tax set to begin in 2024 in the EU, U.K., Japan, Indonesia and many other countries. While the <a href="https://apnews.com/article/russia-ukraine-biden-poland-2577a450b3cb18f325d61e9920e2593d">Biden administration has helped spearhead</a> the global effort to implement the tax, the U.S. <a href="https://www.politico.com/news/2022/07/15/manchin-rejects-global-tax-plan-00046103">has notably not been able</a> to get legislation through Congress. </p>
<p>Our research suggests implementing this type of tax reform is necessary to reverse the shift of ever-greater amounts of corporate profits going to tax havens – instead of being taxed by the governments where they operate and create value.</p><img src="https://counter.theconversation.com/content/200034/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Ludvig Wier is also Head of Secretariat at the Danish Ministry of Finance, holds a PhD from the University of Copenhagen and does research for UNU-WIDER, which provided funding for the underlying research in this story. The views expressed in this paper are those of the authors, and do not necessarily reflect the views of the Ministry of Finance of Denmark, UNU-WIDER, the United Nations University, nor its program/project donors. All data are available online at <a href="https://missingprofits.world">https://missingprofits.world</a>.</span></em></p><p class="fine-print"><em><span>Gabriel Zucman receives funding from the Stone Foundation, the Carnegie Foundation, the European Research Council, and the European Commission grant TAXUD/2020/DE/326.</span></em></p>New research shows that companies are shifting record amounts of their profits to tax havens, despite a global effort to crack down on the practice.Ludvig Wier, External Lecturer of Economics, University of CopenhagenGabriel Zucman, Associate Professor of Economics, University of California, BerkeleyLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/1693532021-10-10T19:08:56Z2021-10-10T19:08:56ZThe Pandora Papers show the line between tax avoidance and tax evasion has become so blurred we need to act against both<figure><img src="https://images.theconversation.com/files/425400/original/file-20211008-15-qg06rl.jpg?ixlib=rb-1.1.0&rect=221%2C329%2C3215%2C1628&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption">
</span> <span class="attribution"><span class="source">Aekawit Rammaket/Shutterstock</span></span></figcaption></figure><p>What’s the difference between tax avoidance and tax evasion? </p>
<p>The difference used to matter. Evasion was illegal. It meant not paying tax that was due. Avoidance meant arranging your affairs so tax wasn’t due.</p>
<p>Australian media mogul Kerry Packer used the distinction as a complete defence when he told a <a href="https://youtu.be/LnwYoOeWZGA?t=312">parliamentary committee</a> in 1991 he was</p>
<blockquote>
<p>not evading tax in any way, shape or form. Of course, I am minimising my tax. Anybody in this country who does not minimise his tax wants his head read.</p>
</blockquote>
<p>The Pandora Papers — the biggest-ever leak of records showing how the rich and powerful use the financial system to maximise their wealth — shows the distinction has lost its meaning.</p>
<p>The dump of almost <a href="https://www.icij.org/investigations/pandora-papers/">12 million documents</a> lays bare the ways in which 35 current or former leaders and 300 high-level public officials in more than 90 countries have used offshore companies and accounts to protect their wealth.</p>
<p>Only in some of the cases could their activities be categorically declared illegal.</p>
<h2>Tax havens are legal</h2>
<p>Here’s how tax havens are used. Trusts and companies are set up in places with low tax rates and secrecy laws such as the Bahamas, Cayman Islands, Hong Kong, Singapore, Switzerland, the US state of Delaware and the Republic or Ireland.</p>
<p>If, for example, a wealthy celebrity or a politician wants to buy a new yacht or a luxury villa but doesn’t want to pay tax or stamp duty or expose their wealth to scrutiny they can get their lawyer or accountant to do it through such a trust.</p>
<hr>
<p>
<em>
<strong>
Read more:
<a href="https://theconversation.com/the-pandora-papers-why-does-south-dakota-feature-so-heavily-169291">The Pandora Papers: why does South Dakota feature so heavily?</a>
</strong>
</em>
</p>
<hr>
<p>For somewhere between <a href="https://www.icij.org/investigations/pandora-papers/global-investigation-tax-havens-offshore/">US$2,000 and US$20,000</a> to set up the trust, the name of the real owner or beneficiary can be hidden.</p>
<p>It isn’t illegal for the celebrity or a politician to move their money (so long as it is theirs to begin with). Assets within the trust are subject to local tax laws (sometimes zero tax) and local secrecy laws (sometimes complete secrecy).</p>
<h2>Legal, but used by criminals</h2>
<p>These legal means of using complex networks of secret entities to move around money are the same as those used by criminals.</p>
<p>Alongside the likes of India’s cricket superstar Sachin Tendulkar, Colombian pop singer Shakira and Elton John in the Panama Papers are Italian crime boss <a href="https://www.icij.org/investigations/pandora-papers/global-investigation-tax-havens-offshore/">Raffaele Amato</a>, serving a 20-year jail sentence for weapons and drugs trafficking, and the deceased British art dealer <a href="https://www.theguardian.com/news/2021/oct/05/offshore-trusts-used-pass-on-looted-khmer-treasures-leak-shows-douglas-latchford">Douglas Latchford</a>, suspected of smuggling looted treasures and money laundering.</p>
<figure class="align-center ">
<img alt="Colombian singer Shakira is one of the celebrities named in the Pandora Papers as using offshore companies. Others are Elton John, Ringo Starr, Julio Iglesias and Claudia Schiffer." src="https://images.theconversation.com/files/425189/original/file-20211007-13-1cp8an9.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/425189/original/file-20211007-13-1cp8an9.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=400&fit=crop&dpr=1 600w, https://images.theconversation.com/files/425189/original/file-20211007-13-1cp8an9.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=400&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/425189/original/file-20211007-13-1cp8an9.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=400&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/425189/original/file-20211007-13-1cp8an9.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=503&fit=crop&dpr=1 754w, https://images.theconversation.com/files/425189/original/file-20211007-13-1cp8an9.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=503&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/425189/original/file-20211007-13-1cp8an9.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=503&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px">
<figcaption>
<span class="caption">Colombian singer Shakira is one of the celebrities named in the Pandora Papers as using
offshore companies. Others are Elton John, Ringo Starr, Julio Iglesias and Claudia Schiffer.</span>
<span class="attribution"><span class="source">Gregory Payan/AP</span></span>
</figcaption>
</figure>
<h2>It’s far from clear these arrangements should be legal</h2>
<p>The big question raised by the Pandora Papers is why any hiding of private wealth from tax authorities ought to be legal.</p>
<p>The International Monetary Fund estimated in 2019 that tax haven deprived governments globally of <a href="https://www.imf.org/external/pubs/ft/fandd/2019/09/tackling-global-tax-havens-shaxon.htm">US$500 billion to US$600 billion</a> per year. </p>
<p>To put that into perspective, the estimated cost of vaccinating the world against COVID-19 is <a href="https://www.nytimes.com/2021/06/11/briefing/biden-g7-vaccine-donations.html">US$50-70 billion</a>. </p>
<figure class="align-right zoomable">
<a href="https://images.theconversation.com/files/425571/original/file-20211009-23-13m746j.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=1000&fit=clip"><img alt="" src="https://images.theconversation.com/files/425571/original/file-20211009-23-13m746j.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=237&fit=clip" srcset="https://images.theconversation.com/files/425571/original/file-20211009-23-13m746j.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=968&fit=crop&dpr=1 600w, https://images.theconversation.com/files/425571/original/file-20211009-23-13m746j.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=968&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/425571/original/file-20211009-23-13m746j.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=968&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/425571/original/file-20211009-23-13m746j.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=1216&fit=crop&dpr=1 754w, https://images.theconversation.com/files/425571/original/file-20211009-23-13m746j.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=1216&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/425571/original/file-20211009-23-13m746j.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=1216&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px"></a>
<figcaption>
<span class="caption">OECD chief Mathias Cormann has brokered a deal for a global minimum corporate tax rate.</span>
<span class="attribution"><span class="source">OECD (CC BY-NC 3.0 IGO)</span></span>
</figcaption>
</figure>
<p>Some of what’s been uncovered in the Pandora Papers is illegal (“evasion”) but much might not be (“avoidance”, aided by anonimity).</p>
<p>The effect is the same. Dollars that ought to have been paid in tax are withheld and used for the benefit of people who aren’t keen to admit to owning them.</p>
<p>Over the weekend the Organisation for Economic Co-operation and Development, now led by Australian Mathias Cormann, brokered a deal under which 136 countries agreed to charge multinational corporations a tax rate of at least <a href="https://www.oecd.org/tax/international-community-strikes-a-ground-breaking-tax-deal-for-the-digital-age.htm">15%</a>, making tax havens harder to find.</p>
<p>Ireland, previously used as tax haven, signed up.</p>
<p>The nations concerned did this because because, even where legal, the use of tax havens costs billions.</p>
<p>We’ll soon have to consider removing a distinction in law that vanished in practice some time ago.</p><img src="https://counter.theconversation.com/content/169353/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Alex Simpson has received funding from Economic and Social Research Council, UK. </span></em></p>It’s become hard to tell where avoidance stops and evasion starts. Tax havens enable both.Alex Simpson, Senior Lecturer in Criminology, Macquarie UniversityLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/1693572021-10-06T05:54:42Z2021-10-06T05:54:42ZThe next Pandora Papers exposé is inevitable – unless governments do more on two key reforms<figure><img src="https://images.theconversation.com/files/424926/original/file-20211006-15-df0a53.jpg?ixlib=rb-1.1.0&rect=0%2C161%2C6000%2C3826&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption">
</span> <span class="attribution"><span class="source">Shutterstock</span></span></figcaption></figure><p>The International Consortium of Investigative Journalists (<a href="https://www.icij.org/">ICIJ</a>) is in the process of working through another mountain of documents showing how the rich and powerful use the global financial system to hide their wealth and avoid taxes. </p>
<p>Those 11.9 million records, dubbed the <a href="https://www.bbc.com/news/world-58780561">Pandora Papers</a>, follows similar leaks in 2017 (the <a href="https://theconversation.com/three-strategies-to-fight-the-tax-avoidance-revealed-by-the-paradise-papers-87002">Paradise Papers</a>), in 2016 (<a href="https://theconversation.com/panama-papers-information-sharing-could-bust-open-secretive-companies-in-tax-havens-57214">the Panama Papers</a>) and in 2014 (the <a href="https://theconversation.com/luxembourg-leaks-how-harmful-tax-competition-leads-to-profit-shifting-33940">Luxembourg Leaks</a>, or LuxLeaks).</p>
<p>Commenting on the 13 million financial and tax documents comprising the Paradise Papers in 2017, <a href="https://theconversation.com/three-strategies-to-fight-the-tax-avoidance-revealed-by-the-paradise-papers-87002">we wrote that</a> “governments have not learnt their lesson and taken action”. </p>
<p>Four years later here we are again. Some progress has been made on the critical reforms needed – in particular, eliminating the secrecy that shrouds tax havens – but there’s still more to do. </p>
<h2>Systemic issues</h2>
<p>In sorting through these new documents, journalists have quite reasonably tended to focus on the “easy connections” and “known individuals”. This work has identified at least 956 companies with more than 336 beneficiaries who are “high-level politicians and public officials”. </p>
<p>This includes Vladimir Putin’s mistress allegedly having assets worth US$100 million, Jordan’s King Abdullah II using offshore companies to buy <a href="https://www.washingtonpost.com/world/interactive/2021/jordan-abdullah-shell-companies-luxury-homes/">three Malibu mansions</a> for US$70 million, and the 11-year-old son of Azerbaijani president Ilham Aliyev <a href="https://www.nbcnews.com/id/wbna35720827">owning nine waterfront mansions</a> in Dubai worth US$44 million.</p>
<p>Also on the list of 35 current and former national leaders, including Czech prime minister Andrej Babiš, Kenyan president Uhuru Kenyatta, Ukrainian president Volodymyr Zelensky and former British prime minister Tony Blair. </p>
<p>But as juicy as these stories are, we should not be distracted from the systemic issues that lead to the wealthy using offshore legal entities and accounts. It’s not always nefarious or illicit.</p>
<hr>
<p>
<em>
<strong>
Read more:
<a href="https://theconversation.com/pandora-papers-its-time-to-pursue-lawyers-and-accountants-who-enable-tax-evasion-offshore-tax-expert-qanda-169192">Pandora papers: 'it's time to pursue lawyers and accountants who enable tax evasion' – offshore tax expert Q&A</a>
</strong>
</em>
</p>
<hr>
<h2>Protecting assets</h2>
<p>In the Pandora Papers are arrangements that, with incomplete information, may appear suspect but may be quite legitimate.</p>
<p>An example might be the 81 trust structures established in the US state of South Dakota and at least 100 more in various other US states where trust disclosures, especially about beneficial ownership, are not mandatory. To properly assess these transactions we really need more information.</p>
<hr>
<p>
<em>
<strong>
Read more:
<a href="https://theconversation.com/the-pandora-papers-why-does-south-dakota-feature-so-heavily-169291">The Pandora Papers: why does South Dakota feature so heavily?</a>
</strong>
</em>
</p>
<hr>
<p>The use of complex business structures, involving countries with high levels of secrecy, may be done to facilitate tax avoidance. But it might also be “asset protection”. </p>
<h2>Weak property rights</h2>
<p>In countries with weak property rights and unreliable judicial systems, even those who accrue wealth legitimately can fear losing it. </p>
<p>Consider, for example, the case of China’s billionaire actress and singer Zhao Wei, who in August was “<a href="https://www.wsj.com/articles/zhao-wei-china-biggest-movie-star-erased-from-internet-11631713293">erased from history</a>”, or <a href="https://www.reuters.com/article/us-china-alibaba-jackma-idUSKBN2AU0QL">Jack Ma</a>, China’s richest man until he <a href="https://www.nytimes.com/2020/12/24/technology/china-jack-ma-alibaba.html">criticised financial regulators</a> last year. </p>
<p>This creates a demand for assets held in other countries (preferably secretly) and a legal system that protects ownership of those assets. It also likely explains why 3.3 million of the 6.9 million documents in this latest leak relate to offices located in Hong Kong. </p>
<p>An analysis of these documents recognising the relative strength of property rights in the countries where individuals, or their businesses, are based would be interesting — and not just as an “academic” exercise. </p>
<p>In many countries, particularly developing countries, weak property rights contribute to lack of capital for economic development by creating incentives for the legitimately wealthy to use offshore accounts and assets. </p>
<p>This suggests a critical need to enhance property rights in these countries. </p>
<p>Weak legal systems also facilitate wealth accumulation through corruption or exploitation. </p>
<h2>Unfinished business</h2>
<p>Five years ago when discussing the revelations from the Panama Papers, we suggested the first thing the global community needed to do was require the public disclosure of country-by-country reporting of company tax affairs by all tax authorities. This idea (known as CbCR) emerged from OECD and G20 recommendations made about the time of the Luxembourg Leaks in 2014. </p>
<hr>
<p>
<em>
<strong>
Read more:
<a href="https://theconversation.com/three-strategies-to-fight-the-tax-avoidance-revealed-by-the-paradise-papers-87002">Three strategies to fight the tax avoidance revealed by the Paradise Papers</a>
</strong>
</em>
</p>
<hr>
<p>About 100 countries have adopted the CbCR policy, at least in part. The problem is that in too many cases – such as Australia and the US – the disclosures are only to the tax authority, not to the public.</p>
<p>In 2017 we also recommended all countries have public registers of beneficial ownership of all entities.</p>
<p>There has also been some progress on this. Significant pressure has been applied to tax havens or secrecy jurisdictions such as the Bahamas and Switzerland. But more is needed. </p>
<p>In Australia, for example, the Paradise Papers led to the government floating the idea of a public register of beneficial ownership, but this was shut down soon after. In the US, states such Delaware and South Dakota are still “secrecy jurisdictions”. </p>
<p>Some progress has been made in making tax havens and secrecy jurisdictions more transparent. But many would say the progress has been mainly benefited wealthy countries, helping them increase tax revenue and to be seen to be doing something to fight corruption, while still allowing corruption to flourish in poorer nations. </p>
<p>Until countries such as the US and Australia embrace the reforms that have been on the table since LuxLeaks, expect further document leaks with similar results in the next five years.</p><img src="https://counter.theconversation.com/content/169357/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>The authors do not work for, consult, own shares in or receive funding from any company or organisation that would benefit from this article, and have disclosed no relevant affiliations beyond their academic appointment.</span></em></p>Juicy stories of political leaders stashing loot overseas make good headlines. But the real story is the need for systemic solutions, especially on property rights and transparency.Roman Lanis, Associate Professor, Accounting, University of Technology SydneyPeter Wells, Professor, Accounting Discipline Group, University of Technology SydneyLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/1691922021-10-04T14:21:14Z2021-10-04T14:21:14ZPandora papers: ‘it’s time to pursue lawyers and accountants who enable tax evasion’ – offshore tax expert Q&A<figure><img src="https://images.theconversation.com/files/425536/original/file-20211008-22-10i6w5n.jpg?ixlib=rb-1.1.0&rect=30%2C15%2C2499%2C1468&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption">What's inside the box?</span> <span class="attribution"><a class="source" href="https://www.shutterstock.com/image-vector/greek-mythology-pandora-opening-box-1858047022">delcarmat/Shutterstock</a></span></figcaption></figure><p><em>Many of the world’s richest and most powerful people are in the spotlight once more for using secretive tax havens and corporate structures to hide wealth and avoid paying taxes. The Pandora papers is the third in a series of huge leaks of documents to the media following the <a href="https://www.icij.org/investigations/panama-papers/">Panama papers</a> in 2016 and the <a href="https://www.icij.org/investigations/paradise-papers/">Paradise papers</a> in 2017 – and little seems to have changed in the interim.</em> </p>
<p><em><a href="https://www.theguardian.com/news/2021/oct/03/pandora-papers-biggest-ever-leak-of-offshore-data-exposes-financial-secrets-of-rich-and-powerful">Those included</a> so far in the new revelations include the leaders of the Czech Republic, Cyprus, Jordan and Ukraine, plus members of the ruling family in Azerbaijan and figures close to Vladimir Putin. In all, more than 100 billionaires are reportedly involved in the revelations, with transactions ranging from properties worth millions of pounds to slush funds and superyachts.</em></p>
<p><em>We asked Professor Ronen Palan, a specialist in offshore tax havens at City, University of London, about the story so far.</em></p>
<p><strong>What are your initial thoughts?</strong></p>
<p>I’m afraid I’m not surprised by these papers. There’s no evidence to suggest that the volume of transactions taking place through these offshore centres is declining, so the same financial structures that we heard about in the Panama and Paradise papers are still clearly being used. </p>
<p>It’s fascinating that so many of these people in the public eye must have known that eventually their activities would become common knowledge, and yet they opted for offshore secrecy anyway. I suppose any concerns may be overcome perhaps by greed and the knowledge that they will not be prevented from doing it. </p>
<p>In some cases we are talking about (illegal) tax evasion and in some cases it’s (legal) tax avoidance: the difference comes down to whether the people in question had fully notified the authorities in their home countries about the offshore structures they are using. In instances when I read that they are asked by the media to comment and they decline to respond, it creates the appearance that we are talking about evasion – although this remains unproven. </p>
<p><strong>Why does the situation not appear to be improving?</strong></p>
<p>Over the past 20 or 30 years, <a href="https://www.oecd.org/tax/beps/">international regulation</a> has <a href="https://ec.europa.eu/taxation_customs/common-consolidated-corporate-tax-base-ccctb_en">focused on</a> creating tools <a href="https://www.irs.gov/businesses/corporations/foreign-account-tax-compliance-act-fatca">that allow</a> tax authorities to ensure that taxpayers are not evading taxation. Systems were introduced that focus on “know your customer” or KYC – requiring people transacting in particular jurisdictions to fully identify themselves so that this information can be shared with other jurisdictions. </p>
<p>This essentially creates transparency so that you know who has money where, so that tax authorities can use this information to make sure that their citizens are not evading taxation. But while that can be effective in countries where the tax authority is operating independently of the government and politics, it’s not going to work in Russia or China or many other developing countries. It’s therefore not surprising to me that many of the revelations are about activities outside of the developed world.</p>
<p><strong>But why hasn’t transparency forced tax havens to change?</strong></p>
<p>It has brought about change, but some jurisdictions comply more than others. So you have got some British jurisdictions such as Jersey or the Cayman Islands that are much more transparent than they used to be. On the face of it, they can claim to be more regulated than, say, Denmark or Sweden. </p>
<p>But the professionals who have the expertise to create structures that enable tax evasion are still often based in these places, and they create structures with different layers that will be partly registered in these jurisdictions but partly in those with looser transparency rules such as the British Virgin Islands or Panama – following the letter but not the spirit of the law. This makes it very difficult to see what is happening and whose money is involved. </p>
<p><strong>How do we improve the current situation?</strong></p>
<p>The Pandora papers show we are reaching the limits of what can be done with data transparency. Unless we find ways to tighten the net, this won’t be the last leak of its kind. This <a href="https://www.oecd.org/tax/crime/ending-the-shell-game-cracking-down-on-the-professionals-who-enable-tax-and-white-collar-crimes.htm">is recognised</a> at least implicitly by the OECD (Organisation for Economic Co-Operation and Development) and <a href="https://coffers.eu/">other international bodies</a> in their increasing interest in going after the enablers, rather than just focusing on the tax evaders themselves.</p>
<figure class="align-center zoomable">
<a href="https://images.theconversation.com/files/424482/original/file-20211004-13-nu2mv7.jpeg?ixlib=rb-1.1.0&q=45&auto=format&w=1000&fit=clip"><img alt="Professionals in the dusk with the sun behind them" src="https://images.theconversation.com/files/424482/original/file-20211004-13-nu2mv7.jpeg?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/424482/original/file-20211004-13-nu2mv7.jpeg?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=609&fit=crop&dpr=1 600w, https://images.theconversation.com/files/424482/original/file-20211004-13-nu2mv7.jpeg?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=609&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/424482/original/file-20211004-13-nu2mv7.jpeg?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=609&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/424482/original/file-20211004-13-nu2mv7.jpeg?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=765&fit=crop&dpr=1 754w, https://images.theconversation.com/files/424482/original/file-20211004-13-nu2mv7.jpeg?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=765&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/424482/original/file-20211004-13-nu2mv7.jpeg?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=765&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px"></a>
<figcaption>
<span class="caption">Meet the enablers.</span>
<span class="attribution"><a class="source" href="https://www.shutterstock.com/image-photo/business-people-travel-beach-trip-airport-245944036">RawPixel.com</a></span>
</figcaption>
</figure>
<p>Maybe it’s time to create something similar to what applies in medicine, so that, if enablers contravene certain standards, they can be prosecuted – even in countries who are not directly affected by their activities. If they went to such a country, they could be arrested on arrival. </p>
<p><strong>Should we create a new international institution dedicated to stamping out tax evasion?</strong></p>
<p>In practical terms, the three places that matter when it comes to creating international regulations are the US, EU and China. Unfortunately they are not agreeing with one another on much right now, so it will be difficult to reach an agreement about such an institution. Even if they did agree, they would be accused of imperialism by smaller countries, or of acting as dictators. </p>
<p>Of course, these three players would still need to agree on an initiative to really go after enablers, so you can make the same criticism of this strategy, but it is at least more modest in its scope and therefore potentially more realistic. </p>
<p><strong>Are all these revelations actually helpful?</strong></p>
<p>There’s certainly a danger of media saturation, in which the public knows about these kinds of activities and may be less interested by now. But we need to emphasise that the consequences are not going away: to run a modern state, it’s very expensive. To pay for a good education system, a good health system, properly functioning infrastructure and so forth, somebody has to pay for it. </p>
<p>If the rich are avoiding paying their share, somebody else is picking up the tab, and that’s either the poor or the squeezed middle classes. So if the public are tired of all this scandal, it doesn’t change the fact that they are suffering because of it.</p><img src="https://counter.theconversation.com/content/169192/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Ronen Palan receives funding from the European Commission's Horizon 2020 fund, European Research Council Advanced Grant, and the OECD. Ronen Palan is a senior advisor to the Tax Justice Network</span></em></p>The latest instalment of leaks about the super-rich using offshore tax havens to hide their wealth has been published.Ronen Palan, Professor of International Politics, City, University of LondonLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/1169722019-08-14T06:18:57Z2019-08-14T06:18:57ZAustralia’s tax office can use global data leaks to pursue multinationals, High Court rules<figure><img src="https://images.theconversation.com/files/279283/original/file-20190613-32342-od0r5.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption">Glencore's lawyers argued anything about the company in the Paradise Papers was "privileged" and the tax office should be prevented from using that information.</span> <span class="attribution"><span class="source">www.shutterstock.com</span></span></figcaption></figure><p>Can something that has been seen be unseen? </p>
<p>It’s an <a href="https://knowyourmeme.com/memes/what-has-been-seen-cannot-be-unseen">axiom</a> of the internet age that it can’t – and though the world’s biggest mining company, <a href="https://www.glencore.com/who-we-are/at-a-glance">Glencore</a> would like it to be otherwise, it’s one with which the High Court of Australia has agreed in a landmark case concerning tax havens and data leaks.</p>
<p>Last year Glencore went to <a href="http://www.hcourt.gov.au/cases/case_s256-2018">the court</a> to demand the Australian Taxation Office unsee what it might have seen about Glencore’s use of offshore legal lurks to minimise its Australian tax obligations.</p>
<p>What had the Anglo-Swiss multinational bothered was information from the single biggest data leak in history – called the <a href="https://www.icij.org/investigations/paradise-papers/">Paradise Papers</a> because the documents exposed the use of “tax paradises” by corporations and wealthy individuals.</p>
<hr>
<p>
<em>
<strong>
Read more:
<a href="https://theconversation.com/four-things-the-paradise-papers-tell-us-about-global-business-and-political-elites-86946">Four things the Paradise Papers tell us about global business and political elites</a>
</strong>
</em>
</p>
<hr>
<p>Glencore’s lawyers argued anything about the company in the leaked documents was “privileged” and the tax office should be prevented from using that information to pursue the company for more money.</p>
<p>Today the <a href="http://eresources.hcourt.gov.au/downloadPdf/2019/HCA/26">High Court agreed</a> the leaked documents were privileged. But it also ruled the tax office could use them. This gives the tax office a green light to use leaked documents to go after any multinational corporation or individual using tax havens to minimise their tax obligations.</p>
<h2>The Paradise Papers</h2>
<p>Glencore was among about 120,000 companies and people mentioned in the Paradise Papers. The papers entail more than 13 million documents handed over to the <a href="https://www.icij.org/investigations/paradise-papers/">International Consortium of Investigative Journalists</a>, which published its first stories in November 2017. Other companies named in the documents include Apple, Facebook, McDonald’s, Nike, Twitter and Uber. Individuals include Queen Elizabeth and pop singer Shakira.</p>
<p>The data leak, like the <a href="https://www.icij.org/investigations/panama-papers/">Panama Papers</a>, <a href="https://www.icij.org/investigations/luxembourg-leaks/explore-documents-luxembourg-leaks-database/">Luxembourg Leaks</a> and <a href="https://eic.network/projects/football-leaks">Football Leaks</a>, illuminated the secretive tax-haven industry for tax agencies. </p>
<p>Prior to the Paradise Papers, the Panama Papers led about two-dozen national agencies to <a href="https://www.icij.org/investigations/panama-papers/panama-papers-helps-recover-more-than-1-2-billion-around-the-world/">collect more than US$1.2 billion</a> in fines and back taxes. The Australian Taxation Office was one of the biggest collectors, recovering more than US$92 million.</p>
<hr>
<p>
<em>
<strong>
Read more:
<a href="https://theconversation.com/these-five-countries-are-conduits-for-the-worlds-biggest-tax-havens-79555">These five countries are conduits for the world's biggest tax havens</a>
</strong>
</em>
</p>
<hr>
<p>Glencore was hoping to ensure the tax office couldn’t use the Paradise Papers to do the same. While in Canada it agreed to pay regulators <a href="https://www.icij.org/investigations/paradise-papers/glencore-fights-transparency-on-one-continent-pays-22m-settlement-on-another/">US$22 million in fines</a> for corporate wrongdoings exposed by the leaked documents, it decided to take a different tack in Australia – where its operations include 25 mines extracting coal, copper, zinc, nickel and bauxite.</p>
<p>Even if the documents exposed Glencore’s connection to secretive deals and hidden companies, Glencore’s lawyers argued they were between lawyer and client, and therefore confidential, covered by “legal professional privilege”.</p>
<p>Because of this privilege, Glencore’s lawyers said, the tax office should not be able use the information to demand more money. </p>
<figure class="align-center ">
<img alt="" src="https://images.theconversation.com/files/287963/original/file-20190814-136222-15hislf.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/287963/original/file-20190814-136222-15hislf.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=400&fit=crop&dpr=1 600w, https://images.theconversation.com/files/287963/original/file-20190814-136222-15hislf.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=400&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/287963/original/file-20190814-136222-15hislf.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=400&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/287963/original/file-20190814-136222-15hislf.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=503&fit=crop&dpr=1 754w, https://images.theconversation.com/files/287963/original/file-20190814-136222-15hislf.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=503&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/287963/original/file-20190814-136222-15hislf.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=503&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px">
<figcaption>
<span class="caption">The possibilities that follow letting a cat out of a bag have been canvassed before the High Court of Australia.</span>
<span class="attribution"><span class="source">www.shutterstock.com</span></span>
</figcaption>
</figure>
<h2>When a cat is let out of a bag</h2>
<p>Barristers on both sides discussed the case in terms of a cat being let out of a bag. </p>
<p>The tax office’s position was that “privilege” only meant someone could refuse to let a cat out of the bag. Once a cat was out of the bag, however,
“privilege” couldn’t be used to put the cat back. </p>
<p>Glencore’s position was that it could, because the cat was still a cat.</p>
<p>The High Court’s justices did not agree with Glencore’s barristers. In their unanimous decision, they state: </p>
<blockquote>
<p>“The Glencore documents are in the possession of the defendants and
may be used in connection with the exercise of their statutory powers unless the
plaintiffs are able to identify a juridical basis on which the Court can restrain that use.”</p>
</blockquote>
<p>This means “privilege” only prevents the tax office from demanding Glencore let the cat out the bag. Now the cat is out of the bag, Glencore can’t ask the tax office to pretend it has not seen the cat. </p>
<h2>Greater loopholes remain</h2>
<p>While this means the tax office can now use leaked documents to pursue a company or individual for more tax, it doesn’t necessarily mean the federal government is about to reap a revenue windfall.</p>
<p>To begin with, tax officials will still need to trawl through millions of documents. To do so will take time and money. </p>
<p>Then, to have a strong case, the tax office will need to find that companies or individuals aren’t just deliberately structuring their tax affairs to minimise tax – because that’s allowed – but are going further, into the illegitimate area of “aggressive tax planning”. </p>
<p>This is the greater problem for Australia’s tax office – not the companies doing something clearly shady but those whose legal resources are so far ahead of the tax office that they can achieve all they want in minimising tax through completely legal loopholes. </p>
<p>It takes years for loopholes to be closed, and once they are, corporate tax advisers just find news ones.</p>
<p>It’s a game between a nimble, well-advised mouse and a slower-moving cat. </p>
<p>That’s a problem no High Court decision can solve. Only a federal government committed to genuine tax reform can do it.</p><img src="https://counter.theconversation.com/content/116972/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>The authors do not work for, consult, own shares in or receive funding from any company or organisation that would benefit from this article, and have disclosed no relevant affiliations beyond their academic appointment.</span></em></p>The High Court of Australia has given the Australia Taxation Office a green light to use leaked information about Glencore and offshore tax havens.Ann Kayis-Kumar, Associate Professor, UNSW SydneyAnnet Oguttu, University of PretoriaLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/888592017-12-08T15:51:44Z2017-12-08T15:51:44ZWhat does corruption mean to you? Examining the plural meanings of corruption<figure><img src="https://images.theconversation.com/files/198298/original/file-20171208-27705-9v3yn.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption">shutterstock</span> <span class="attribution"><span class="source">shutterstock.com</span></span></figcaption></figure><p>The global anti-corruption movement has long been dominated by a rationalist approach. Proponents of this approach believe that countries can reduce corruption with the presence of democracy, good organisational culture and governance. This approach also sees corruption as a moral problem. </p>
<p>Corruption has been commonly referred to as “<a href="http://www.jstor.org/stable/24357767">cancer</a>”, “<a href="http://www.observer.ug/component/content/article?id=34145:-corruption-is-now-ugandas-aids-says-us-envoy-">AIDS</a>"or ”<a href="https://timesofindia.indiatimes.com/Corruption-the-root-cause-of-all-evils/articleshow/1859398.cms">the root of all evil</a>“ that robs the poor and damages the moral of society.</p>
<p>However, such construction of meaning needs to be examined. As we welcome the International Anti-Corruption Day on December 9th, we need to be critical towards the dominant voices shaping the definition of corruption and how anti-corruption becomes articulated as a movement.</p>
<p>Scandals like <a href="https://www.icij.org/investigations/paradise-papers/">Paradise Papers</a>, and <a href="https://panamapapers.icij.org/">Panama Papers</a> as well as <a href="http://edition.cnn.com/2013/07/02/us/enron-fast-facts/index.html">Enron</a> and <a href="http://www.theage.com.au/interactive/2016/the-bribe-factory/day-1/the-company-that-bribed-the-world.html">Unaoil</a> cases show that even countries that are considered to have mature democratic systems, the best work ethics and good governance are not immune from corrupt behaviours.</p>
<h2>An ideological tool</h2>
<p>Economist <a href="https://www.theguardian.com/commentisfree/2016/may/12/anti-corruption-summit-us-united-kingdom-tax-havens">Jeffrey Sachs</a> argued that ending corruption should start with the United Kingdom and the United States because the two powerful countries also have a "culture of corruption” by letting it happen openly. Legalising the existence of tax havens is essentially making it easy for the rich to avoid paying taxes.</p>
<p>The global anti-corruption movements often face difficulties in encouraging behavioural change. That’s because Western anti-corruption elites have dominated the movement. This has silenced those who are most affected by the movement, the marginalised groups. </p>
<p>For <a href="https://dash.harvard.edu/bitstream/handle/1/31886532/14ConnJIntlL455.pdf?sequence=1">David Kennedy</a>, a Harvard law professor, the anti-corruption concept is more appropriately viewed as an ideological tool to control those who play outside the ruling system. </p>
<p>Anti-corruption has created a stigma against local economic and political systems. Stigmatising these local systems as more inferior, according to Kennedy, is part of an effort to perpetuate power imbalances. </p>
<p>Kennedy also criticises anti-corruption practices that view corruption as an acute <a href="http://onlinelibrary.wiley.com/doi/10.1002/pad.1604/full">moral</a> problem that has infected all sectors and layers of society. Looking at corruption as a moral problem ignores the conditions of post-colonial societies such as Indonesia that is influenced by historical contexts, political transformation processes, the economy and socio-cultural dynamics. </p>
<p>Kennedy’s view echoes <a href="http://ekonomi.kompas.com/read/2016/04/21/12150061/Menilik.Pemikiran.Kartini.tentang.Korupsi.?page=all">Kartini’s</a>, an Indonesian thinker who lived during Dutch colonial rule. She shared a similar observation when writing about how corruption in her time was a combination of economic pressures, imperfect governance system, and people’s social expectations. </p>
<p>Today Indonesia still face similar challenges. The <a href="http://documents.worldbank.org/curated/en/267671467991932516/Indonesias-rising-divide">World Bank</a> reported that poverty reduction has slowed while economic inequality has increased. Additionally, Indonesia still needs to improve public sector management - a problem that can’t be easily attributed to individual morality.</p>
<h2>The anti-corruption industry</h2>
<p>Globally, anti-corruption has become an industry worth more than <a href="https://web.hku.hk/%7Ebmichael/publications/Germany%20Waves%20Paper.pdf">US$5 billion</a>. Seminars and workshops on anti-corruption and good governance have been held not only in Indonesia, but across the world.</p>
<p>Various pacts and conventions have been signed such as <a href="https://www.coe.int/en/web/conventions/full-list/-/conventions/treaty/173">Council of Europe Criminal Law Convention and Protocol on Corruption</a>, <a href="https://au.int/en/treaties/african-union-convention-preventing-and-combating-corruption">African Union Convention on Preventing and Combating Corruption</a>, <a href="https://www.unodc.org/unodc/en/treaties/CAC/">UN Convention Against Corruption</a>, and OECD Anti-Bribery Convention. </p>
<p>At the organisational level - either public or private - there have been various anti-corruption instruments such as training curriculum, various modules, pocket books, to <a href="http://www.tribunnews.com/video/2016/09/20/australia-sumbang-permainan-anti-korupsi-buat-anak-anak-di-surakarta">children’s games</a>. </p>
<p>In 2001, <a href="http://www.lse.ac.uk/internationalDevelopment/pdf/WP/WP18.pdf">Tara Polzer</a> wrote that the global anti-corruption movement led by agencies such as the World Bank and Transparency International could not be separated from the global politics in the late 1990s. </p>
<p>Following the Asian financial crisis in the late 1990s, donor countries, concerned over corrupt practices by political elites in developing countries, pressured the World Bank to push for more accountability on how development funds are channeled. </p>
<p>The World Bank then changed its strategy and started to address corruption eradication in lending countries. This was originally regarded as a domestic issue that was off limits for the international financial institution.</p>
<p>Since then, the anti-corruption movement has been carried out with fervor, targeting social values and political systems that are considered “primitive” or “distorted”. </p>
<p>Often the fight against corruption targets the wrong practices. For instance, in some cases of corruption related to the procurement of goods and services, the zeal for anti-corruption has lead to the <a href="http://www.birokratmenulis.org/menolak-kriminalisasi-pbj/">criminalisation</a> of things that are not qualified enough to be considered as an act of corruption.</p>
<h2>The need of an alternative approach</h2>
<p>Some researchers have proposed alternative approaches that capture how corruption is viewed by individuals involved, not through an “outsiders” perspective. </p>
<p>For example, the <a href="http://cer-staging.thomas-paterson.co.uk/sites/default/files/publications/attachments/pdf/2011/e246_unwritten_rules-2203.pdf">study of ethnography in Russia</a> explores how local people view the Blat practice, categorised as nepotism by the anti-corruption movement, as a regular social activity and has even become an important part of the society’s local identity. It turns out that the Blat practice, as an unwritten social convention, has its own mechanism in overcoming ineffectiveness of written regulations.</p>
<p>Meanwhile, <a href="http://www.brill.com/corruption-empty-signifier">a study in Tanzania</a> reveals that the anti-corruption movement has created many regulations that in concept aim to emancipate the poor but in practice suppress them. Precisely through the practices that are common to be called corruption marginalised people can access public service and benefits from income redistribution. This is similar to <a href="https://boris.unibe.ch/58286/">“cigarette money” or “sweat money”</a> in Indonesia. </p>
<p><a href="https://minerva-access.unimelb.edu.au/handle/11343/129136">My disertation</a> also reveals that the global anti-corruption movement tends to ignore alternative interpretations rooted to identity. Giving away money or things as an “expression of gratitude”, viewed as a corrupt practice by the anti-corruption movement, is commonly interpreted as a gesture of appreciation in Indonesia. </p>
<h2>Anti-corruption in the future</h2>
<p>Corruption needs to be understood in its context. We should view corruption that occurs in the bureaucratic level in a society in transition as <a href="http://www.brill.com/corruption-empty-signifier"><em>growing pains</em></a> that will heal as the population becomes more educated and wealthy. </p>
<p>Currently, a handful of rational approaches have also started questioning the assumptions that corruption is bad for growth. Some countries without good governance is <a href="http://www.sciencedirect.com/science/article/pii/S0305750X09001193">growing because of “corruption”</a>. In some <a href="http://www.sciencedirect.com/science/article/pii/S106294081500100X">Asian Pacific countries</a>, it turns out that “corruption” is useful for their economic growth.</p>
<p>These findings should not be viewed as a defense for corruption, but instead as a note that every economic system has different growth mechanism. </p>
<h2>Corruption as a social construct</h2>
<p><a href="https://sociology.stanford.edu/publications/social-construction-corruption">Sociologist Mark Granovetter</a> wrote that what is considered corruption depends on the position and the interest of the related individual.</p>
<p>Corruption can be subjectively interpreted. These interpretation often contradicts the mainstream definitions. This demands a space for alternative interpretations because often the differing interpretations hampers the fight against corruption. Terms like “transportation money”, “gifts”, and “charity”, should be interpreted through the lens of related individuals to achieve a solution that resonates with them. </p>
<p>One of the strategies is to acknowledge the existence of these interpretations then think about how to manage them attentively, not dismissively. We should sort out practices that have been categorised into the big basket of “corruption”. We should identify the root meanings of these practices and develop solutions based on the economic and socio-cultural contexts of these actions.</p>
<p>Contextualisation of anti-corruption is not an effort to justify corruption, but rather an attempt to increase ownership and effectiveness of the movement. As a member of the Third World Indonesia needs to take a closer look before adopting concepts that are considered universal. By doing this Indonesia can avoid creating social problems from alienating its own identity for ideas that do not fit with values such as <a href="https://www.localfutures.org/the-march-of-the-monoculture/">reciprocity and interdependence</a>. </p>
<p>Reformulating the anti-corruption movement may seem radical or even odd. Even so, we should not fear something that seemed strange as long as we have a strong and legitimate foundation of thinking. More importantly, this may prevent anti-corruption from becoming a meaningless slogan that does not have a real impact in changing people’s daily behaviours.</p>
<hr>
<p><em>Editor’s note: A previous version of this article contained an error on the value of the anti-corruption industry. We’ve corrected the mistake.</em></p><img src="https://counter.theconversation.com/content/88859/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Kanti Pertiwi received the Endeavour Award for her PhD research. </span></em></p>Does corruption means the same for everyone? Some social researchers argue that corruption is a social construct shaped by Western anti-corruption elites.Kanti Pertiwi, Lecturer, Universitas IndonesiaLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/875602017-11-21T11:51:48Z2017-11-21T11:51:48ZBrexit calls for free trade are a convenient smoke screen for more corporate tax privilege<p>Liam Fox’s <a href="http://www.telegraph.co.uk/business/2017/11/07/fox/">call</a> for Britain to champion the cause for free trade in the wake of Brexit and increasing trade barriers, needs to be examined against further revelations of the so-called <a href="https://theconversation.com/four-things-the-paradise-papers-tell-us-about-global-business-and-political-elites-86946">Paradise Papers scandal</a>, and other evidence of the growing power and influence of the British corporate elite.</p>
<p>The UK international trade secretary stated that non-tariff trade barriers operated by G20 countries have risen sharply since 2010. At a time of struggling economic growth in the poorer parts of the world, such trade barriers <a href="http://www.telegraph.co.uk/business/2017/11/07/fox/">have risen</a> from 300 to 1,200 between 2010 and 2015.</p>
<p>By contrast to this growing protectionism, the British government now champions the cause of open and free trade to lift the global poor. But this claim does not sit comfortably with further revelations in the recent Paradise Papers leak. The documents from offshore financial service providers (many of which are British overseas territories and crown dependencies) show widespread tax avoidance by companies and the ultra wealthy. </p>
<p>Meanwhile, the UK tax code – and its enforcement over the past 30 years – is largely based on the capture of British government legislative and economic policy by UK corporate interests. The complex structures that allow multinationals, and high-net-worth individuals, to protect their cash overseas is just one small part of a multi-billion pound corporate tax avoidance industry. Not only does this harm the UK economy, it <a href="http://blogs.lse.ac.uk/africaatlse/2014/03/07/tax-evasion-the-main-cause-of-global-poverty/">entrenches global poverty</a>.</p>
<h2>Two sides, same argument</h2>
<p>After many years of celebrating the economic benefits of the single market, the British government now argues for a decisive Brexit to remove all barriers and needless regulation from world trade. The efficiency gains from growing free trade, the argument goes, will ensure all nations benefit from a rising tide of prosperity, not just the UK. </p>
<p>This seems contrary to the government’s previous <a href="https://www.gov.uk/government/publications/why-the-government-believes-that-voting-to-remain-in-the-european-union-is-the-best-decision-for-the-uk/why-the-government-believes-that-voting-to-remain-in-the-european-union-is-the-best-decision-for-the-uk">Remain argument</a>, which asserted that the economic value of membership of a large trading block, such as the EU, and free trade only within the single market. </p>
<p>But further examination of this reveals that the difference is not so clear-cut between the two positions.</p>
<p>Many of those in favour of continued membership of the EU, on both sides of the Channel, do not just want protection from a “race to the bottom” and declining employment and environmental standards. European leaders, <a href="https://www.theguardian.com/commentisfree/2017/may/08/emmanuel-macron-france-economics-neoliberalism">such as French president, Emmanuel Macron</a>, also want to protect the fruits of open and unregulated markets, privatisation of national assets, and low corporate tax rates. </p>
<p>In the UK, the main Brexit and Remain sides merely champion different versions of <a href="https://www.theguardian.com/books/2016/apr/15/neoliberalism-ideology-problem-george-monbiot">neoliberal economics</a>, with all its theoretical proofs for efficiency, prosperity, stability and fairness. Both want to give a largely unregulated corporate sector further freedom to best allocate capital as they see fit, with the idea that it will better serve the UK consumer and producer.</p>
<h2>The real story</h2>
<p>The real economic story since 2010 in the UK is not growing European protectionism, now opposed by the government in the name of liberty and good conscience. It is that UK corporate tax rates have fallen in <a href="http://www.telegraph.co.uk/finance/budget/9944515/Corporation-tax-falls-to-20-per-cent-in-fourth-consecutive-Budget-cut.html">each of the four previous budgets</a> at a time when UK household living standards have shrunk <a href="http://www.independent.co.uk/news/business/news/brexit-latest-news-uk-household-living-standards-inflation-rise-fast-2011-ons-office-national-a7827171.html">at their fastest pace since 2011</a>. In the shadow of the next budget, the chancellor, Philip Hammond, would do well to remember that the country is <a href="https://www.ifs.org.uk/publications/9207">forecast</a> to not even raise 7% of its total tax receipts from corporation tax in 2017-18. </p>
<p>What is particularly revealing in terms of corporate privilege is that UK corporate profits are currently at or near <a href="https://tradingeconomics.com/united-kingdom/corporate-profits">record highs as a percentage of GDP</a>. The growing wealth and power of this elite in the UK since 2010 <a href="https://www.theguardian.com/business/2017/sep/18/uk-debt-crisis-credit-cards-car-loans">has many implications</a> for declining UK living standards, social stability and the current household debt crisis. </p>
<p>In the last seven years, the City has rigged markets (<a href="https://theconversation.com/qanda-what-is-the-libor-scandal-and-why-does-it-matter-45662">Libor</a>), <a href="https://theconversation.com/hsbc-scandal-the-uks-strict-rules-on-bank-customers-were-abandoned-at-the-border-37431">laundered money</a> and <a href="https://www.thetimes.co.uk/edition/business/lloyds-to-pay-80m-in-new-sales-blunder-06r3gnq2d">mis-sold products</a>, but has diverted attention by implicitly threatening to take even more more of its profits out of the UK. Meanwhile, the benefits of privatising the once state-owned utilities – <a href="https://www.theguardian.com/politics/2017/nov/11/mcdonnell-37bn-paid-to-shareholders-should-have-been-invested">£37 billion in dividends since 2010</a> – have gone to a relatively few shareholders, not to the increasingly stretched British household. </p>
<p>The current UK tax system works not just in favour of corporate interests, but is fundamentally unsuited to the digital economy where capital can be moved around the world at the flick of an electronic switch. </p>
<p>By contrast, <a href="http://voxeu.org/article/financial-transaction-tax-feasible-and-desirable-if-done-right">research</a> led by a former City banker concluded that a more broad-based financial transactions tax would bring an <a href="https://www.robinhoodtax.org.uk/former-banker-lays-out-plan-uk-robin-hood-tax">additional £5 billion a year</a>. Another simple, unavoidable and efficient tax, a land value tax, is <a href="https://iea.org.uk/blog/the-case-for-a-land-value-tax-0">even championed by</a> the UK’s self-proclaimed “original free-market think tank”, the Institute of Economic Affairs. </p>
<p>Both taxes point to the current UK corporate tax arrangements as increasingly indefensible. </p>
<p>So the call for free trade – whether global or just in the EU – is a convenient smoke screen that obscures the vast corporate privilege and profits that is embedded in UK governmental and economic policy. And the budget is very unlikely to change <a href="https://www.ifs.org.uk/publications/9207">estimates</a> that money raised from corporation taxes will fall to just 2.3% of UK national income by 2021–22.</p><img src="https://counter.theconversation.com/content/87560/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Jonathan Winship does not work for, consult, own shares in or receive funding from any company or organisation that would benefit from this article, and has disclosed no relevant affiliations beyond their academic appointment.</span></em></p>It’s unlikely the next budget will do much to address the UK’s failure to raise money from corporation taxes.Jonathan Winship, Lecturer in Accounting and Finance, The Open UniversityLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/865092017-11-17T01:33:38Z2017-11-17T01:33:38ZMillions, billions, trillions: How to make sense of numbers in the news<figure><img src="https://images.theconversation.com/files/194864/original/file-20171115-19829-q98wr6.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption">Breaking down the big numbers.</span> <span class="attribution"><a class="source" href="https://www.shutterstock.com/image-photo/100-us-dollar-cents-abstract-background-741348124?src=7ABuTcHgqkKIzqBIby6dPg-1-2">helen_g/Shutterstock.com</a></span></figcaption></figure><p>National discussions of crucial importance to ordinary citizens – such as funding for scientific and medical research, bailouts of financial institutions and the current Republican tax proposals – inevitably involve dollar figures in the millions, billions and trillions. </p>
<p>Unfortunately, <a href="https://dx.doi.org/10.3389/fpsyg.2016.00508">math anxiety is widespread</a> even among intelligent, highly educated people.</p>
<p>Complicating the issue further, citizens emotionally undeterred by billions and trillions are nonetheless likely to be ill-equipped for meaningful analysis because <a href="https://dx.doi.org/10.1111/cogs.12028">most people don’t correctly intuit large numbers</a>.</p>
<p>Happily, anyone who can understand tens, hundreds and thousands can develop habits and skills to accurately navigate millions, billions and trillions. Stay with me, especially if you’re math-averse: I’ll show you how to use school arithmetic, common knowledge and a little imagination to train your emotional sense for the large numbers shaping our daily lives.</p>
<h2>Estimates and analogies</h2>
<p>Unlike Star Trek’s Mr. Spock, scientists and mathematicians are not exacting mental calculators, but habitual estimators and analogy-makers. We use “back of the envelope” calculations to orient our intuition. </p>
<p>The bailout of AIG after the mortgage-backed securities crisis cost <a href="http://money.cnn.com/news/storysupplement/economy/bailouttracker/index.html">more than US$125 billion</a>. The <a href="https://www.theguardian.com/news/2016/apr/03/what-you-need-to-know-about-the-panama-papers">Panama Papers</a> document <a href="http://www.newsweek.com/panama-papers-top-ten-tax-havens-where-money-hidden-444512">upward of $20 trillion</a> hidden in a dark labyrinth of shell companies and other tax shelters over the past 40 years. (The recently published <a href="https://www.theguardian.com/news/2017/nov/05/paradise-papers-leak-reveals-secrets-of-world-elites-hidden-wealth">Paradise Papers</a> paint an even more extensive picture.) On the bright side, we recovered $165 million in bonuses from AIG executives. That’s something, right?</p>
<p>Let’s find out: On a scale where a million dollars is one penny, the AIG bailout cost taxpayers $1,250. The Panama Papers document at least $200,000 missing from the world economy. On the bright side, we recovered $1.65 in executive bonuses.</p>
<p>In an innumerate world, this is what passes for fiscal justice.</p>
<p>Let’s run through that again: If one penny represents a million, then one thousand pennies, or $10, represents a billion. On the same scale, one million pennies, or $10,000, represents a trillion. When assessing a trillion-dollar expenditure, debating a billion dollars is quibbling over $10 on a $10,000 purchase.</p>
<p>Here, we’ve scaled monetary amounts so that “1,000,000” comprises one unit, then equated that unit to a familiar – and paltry – quantity, one penny. Scaling numbers to the realm of the familiar harnesses our intuition toward understanding relative sizes. </p>
<p>In a sound bite, a savings of $200 million might sound comparable to a $20 trillion cost. Scaling reveals the truth: One is a $2 (200-cent) beverage, the other the $200,000 price of an American home.</p>
<h2>If time were money</h2>
<p>Suppose you landed a job paying $1 per second, or $3,600 per hour. (I assume your actual pay, like mine, is a tiny fraction of this. Indulge the fantasy!) For simplicity, assume you’re paid 24/7. </p>
<p>At this rate, it would take one million seconds to acquire $1 million. How long is that in familiar terms? In round numbers, a million seconds is 17,000 minutes. That’s 280 hours, or 11.6 days. At $1 per second, chances are you can retire comfortably at the end of a month or few.</p>
<p>At the same job, it takes 11,600 days, or about 31.7 years, to accumulate $1 billion: Doable, but you’d better start young. </p>
<p>To acquire $1 trillion takes 31,700 years. This crummy job doesn’t pay enough!</p>
<p>This analogy gives a taste for the absolute size of a billion, and perhaps of a trillion. It also shows the utter impossibility of an ordinary worker earning $1 billion. No job pays a round-the-clock hourly wage of $3,600.</p>
<h2>Nice work if you can get it</h2>
<p>Let’s examine the wealth of actual multi-billionaires. Our calculations prove that they acquired more than $1 per second over long intervals. How much more?</p>
<p>Testifying to the Senate Judiciary Committee on July 27, William Browder, an American-born businessman with extensive Russian dealings, <a href="https://www.judiciary.senate.gov/imo/media/doc/07-26-17%20Browder%20Testimony.pdf">estimated</a> that Vladmir Putin controls assets of $200 billion. Let’s assume this figure is substantially correct and that Putin’s meteoric rise began 17 years ago, when he first became president of Russia. What is Putin’s average income?</p>
<p>Seventeen years is about 540 million seconds; $200 billion divided by this is … wow, $370 per second. $1,340,000 per hour. Yet even at this colossal rate, acquiring $1 trillion takes 85 years.</p>
<p>The Panama Papers document some $20 trillion – the combined fortunes of one hundred Vladimir Putins – sequestered in shell companies, untaxed and untraceable. Though the rate of leakage has surely increased over time, for simplicity let’s assume this wealth has bled steadily from the global economy, an annual loss around $500 billion. </p>
<p>How much is this in familiar terms? To find out, divide $500 billion by 31.6 million seconds. Conservatively speaking, the Panama Papers document an ongoing loss averaging $16,000 per second, around the clock, for 40 years.</p>
<h2>Fighting over scraps</h2>
<p>American cities are now vying for a <a href="https://www.amazon.com/b?ie=UTF8&node=17044620011">$5 billion Amazon headquarters</a>, a windfall to transform the local economy lucky enough to win the contract. At the same time, the world economy hemorrhages that amount into a fiscal black hole every few days. Merely stemming this Niagara (not recovering the money already lost) would amount to one hundred new Amazon headquarters per year.</p>
<p>The root cause of our economic plight looms in plain sight when we know the proper scale on which to look. By overcoming math phobia, wielding simple arithmetic, refusing to be muddled by “gazillions,” we become better citizens, avoiding squabbling over pennies when tens of thousands of dollars are missing.</p><img src="https://counter.theconversation.com/content/86509/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Andrew D. Hwang does not work for, consult, own shares in or receive funding from any company or organization that would benefit from this article, and has disclosed no relevant affiliations beyond their academic appointment.</span></em></p>Today’s news can often involve mind-bogglingly large numbers. A math professor shares some tricks for understanding it all.Andrew D. Hwang, Associate Professor of Mathematics, College of the Holy CrossLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/873762017-11-14T15:22:55Z2017-11-14T15:22:55ZParadise Papers yet another example of the power of collaboration in investigative journalism<figure><img src="https://images.theconversation.com/files/194319/original/file-20171113-27635-k8o3vu.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption">Jat306 via Shutterstock</span> </figcaption></figure><p>The recent publication of the <a href="https://theconversation.com/uk/topics/paradise-papers-45854">Paradise Papers</a> is another strong indication of the rising importance of <a href="https://theconversation.com/panama-papers-the-nuts-and-bolts-of-a-massive-international-investigation-57197">global collaboration</a> for investigative journalism. </p>
<p>In April 2016, a consortium of news organisations published <a href="https://theconversation.com/uk/topics/panama-papers-26281">the Panama Papers</a> – the first major leak revealing the scale of tax avoidance by companies and high-profile individuals. It was a huge logistical operation, co-ordinated by the <a href="https://www.icij.org/">International Consortium for Investigative Journalism</a> (ICIJ), which has <a href="https://www.icij.org/investigations/paradise-papers/about/">played the same role</a> with the Paradise Papers, revealing further offshore dealings, although from a different source and involving different locations.</p>
<p>The Paradise Papers was coordinated by the ICIJ with 95 international partners comprising more than 380 journalists working on six continents in 30 languages. The team scoured more than 13.4m files obtained by the German newspaper Süddeutsche Zeitung over more than a year using online platforms to communicate and to share documents. As the ICIJ website declares: “Journalists tracked down court records, obtained financial disclosures of politicians in Africa, Europe, and Latin and North America, filed freedom of information requests and conducted hundreds of interviews with tax experts, policymakers and industry insiders.”</p>
<p>The ICIJ is not the only organisation involved in this sort of large-scale investigation. The <a href="https://wikileaks.org/irq/">Wikileaks Iraq war logs</a>, <a href="https://www.theguardian.com/us-news/the-nsa-files">Edwards Snowden’s NSA files</a> and many other recent whistleblower–led investigations have been managed as collaborations across countries and organisations. It’s an emerging trend that is becoming increasingly vital as these global investigations become ever more difficult for news organisations to tackle on their own.</p>
<p>Last December, in the wake of the Panama Papers, the <a href="https://reutersinstitute.politics.ox.ac.uk/">Reuters Institute for the Study of Journalism</a> at Oxford University held a one day workshop with a number of journalists who had been involved in such collaborative investigations. The aim was to discuss the advantages – and problems – of these big logistical operations with the hope of distilling some best practise for others to follow.</p>
<p>Because, at a time when serious accountability journalism is under pressure around the world, such collaborations are a way of managing risk and bringing greater attention to public issues than any newsroom on its own could manage. The full reflections of the workshop and others involved in collaborations will be published in the new year. But there were some clear conclusions.</p>
<h2>Tools of collaboration</h2>
<p>Trust building between different organisations, usually from a newsroom level upwards, is essential. There are now several groups of journalists who regularly collaborate having built both trust and a joint working practise which is understood. Collaborative initiatives often begin at newsroom level, where staff find the benefits of collaboration easier to identify than senior executives who may be overly focused on exclusivity or other competitive factors. Each organisation has to take responsibility and legal advice within its own territories but sometimes complex coordination on stories and embargoes has to be agreed.</p>
<p>Confidentiality is crucial and needs to be supported by a high level of “<a href="https://medium.com/@terryjohnlee/communication-hygiene-9dcdd6ddd7db">communication hygiene</a>” – for example, encryption. By the time a whistleblower has contacted a news organisation, their identity may already be compromised. Secure channels of communication – such as “dropboxes” need to be set up and publicised.</p>
<p>If non-profit organisations are involved, or third party funders, objectives and success measures need to be agreed in advance together with principles of editorial independence. There are individuals and foundations prepared to fund investigative journalism, but agendas need to be understood and managed in the interests of transparency.</p>
<p><div data-react-class="Tweet" data-react-props="{"tweetId":"927234309429383170"}"></div></p>
<p>Technology – and the ability to develop and modify software or other technology to suit the needs of a particular project – is crucial. Developers and journalists need to work in an integrated way. It is noticeable that the ICIJ now has a <a href="https://www.icij.org/blog/2017/347/data-tech-team-icij/">significant number of technology developers and coders</a> involved in its work.</p>
<p>A neutral partner – such as a non-profit news organisation or jointly owned joint venture – can play a valuable role in managing tensions and potential conflicts of interest between partners. In the end, one trusted party has to make decisions and hold other partners to account. This editorial coordinating calls on the traditional strengths of news editing and management – but with additional responsibilities and skills required to manage across organisations and geographies.</p>
<h2>New realities in journalism</h2>
<p>The rise in multinational collaboration reveals something about the state of the news industry. With business models disrupted by digital platforms, many organisations – once regarded as mighty news institutions – are <a href="http://www.pewresearch.org/topics/state-of-the-news-media/">struggling to get</a> by or to <a href="https://www.huffingtonpost.com/glenn-c-altschuler/investigating-investigati_b_12537054.html">field the scale or resources</a> required for long and complex investigations. At the same time, there has been a rise in <a href="http://www.niemanlab.org/2017/10/with-its-new-reporting-network-propublica-wants-to-fund-investigative-reporters-around-the-u-s/">small start-up organisations</a> – some commercial, some non-profit – seeking to establish and differentiate themselves in a crowded market.</p>
<figure class="align-center ">
<img alt="" src="https://images.theconversation.com/files/194321/original/file-20171113-27579-1go02c8.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/194321/original/file-20171113-27579-1go02c8.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=401&fit=crop&dpr=1 600w, https://images.theconversation.com/files/194321/original/file-20171113-27579-1go02c8.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=401&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/194321/original/file-20171113-27579-1go02c8.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=401&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/194321/original/file-20171113-27579-1go02c8.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=504&fit=crop&dpr=1 754w, https://images.theconversation.com/files/194321/original/file-20171113-27579-1go02c8.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=504&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/194321/original/file-20171113-27579-1go02c8.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=504&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px">
<figcaption>
<span class="caption">Investigative journalism: shedding light in areas that authorities would rather keep secret.</span>
<span class="attribution"><span class="source">Olaf Speier via Shutterstock</span></span>
</figcaption>
</figure>
<p>These two groups are often perceived as being in conflict with one another – the start-up insurgency seeking to undermine big legacy media. But, in truth, they often need each other in the new communication environment. Major organisations still have an institutional weight and broad audience reach which newcomers lack. Equally, new players often have technical skills, market nimbleness and may attract a younger audience in ways the major players struggle to achieve.</p>
<p>Where they come together – in pursuing global accountability – they can complement and learn from each other. Big media can provide scale, reach and institutional strength while smaller organisations can provide new perspectives, new skills and new audiences.</p>
<p>As politics, business, trade, and indeed, crime all develop into transnational activities, it is essential that journalism and those concerned with public accountability similarly respond. The need for news organisations to raise their sights beyond national boundaries and to raise their skills to engage with the highly developed systems of financial technology, or internet enabled crime is now acute. </p>
<p>The overall concept of public accountability – and, in particular, the important journalism about it – increasingly cannot and should not be narrowly confined by mere geographic boundaries.</p><img src="https://counter.theconversation.com/content/87376/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Richard Sambrook does not work for, consult, own shares in or receive funding from any company or organisation that would benefit from this article, and has disclosed no relevant affiliations beyond their academic appointment.</span></em></p>Established media organisations are collaborating across borders and with new media to break big stories such as global tax avoidance by the rich and powerful.Richard Sambrook, Professor of Journalism, Cardiff UniversityLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/871462017-11-09T12:02:30Z2017-11-09T12:02:30ZThe Isle of Man is a tax haven – but its prosperity has precarious roots<figure><img src="https://images.theconversation.com/files/193960/original/file-20171109-27120-1sl4qpb.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption">Before financial services, the Isle of Man's economy relied on tourism.</span> <span class="attribution"><span class="source">shutterstock.com</span></span></figcaption></figure><p>It’s not since 1973 that the Isle of Man has sat so firmly in the cross-hairs of British media attention. In August that year, a <a href="http://www.bbc.co.uk/news/world-europe-isle-of-man-23449990">disastrous fire</a> at the Summerland resort claimed the lives of 50 holidaymakers. Now it is the <a href="https://theconversation.com/four-things-the-paradise-papers-tell-us-about-global-business-and-political-elites-86946">Paradise Papers</a> revelations about tax avoidance which have focused international interest on this windswept, semi-sovereign island. </p>
<p>The links between the two events are not as tenuous as it might seem. Both were the result of inadequate regulation and scrutiny. The materials used in key parts of Summerland were not fire retardant – nor did they need to be, in accordance with Manx building regulations at the time. And if the Summerland precedent is anything to go by, the ensuing legislative clampdown on tax avoidance will deliver rapid reform. But a knee-jerk reaction, in this instance, could inflict more harm than good.</p>
<p>British media reactions in the wake of the Paradise Papers leak have been savage, and rightly so. Legal loopholes <a href="https://theconversation.com/these-five-countries-are-conduits-for-the-worlds-biggest-tax-havens-79555">exploited by British Crown Dependencies</a> have facilitated tax avoidance on an immense scale, depriving the government (and ordinary citizens) of money that could be channelled into public services. But to condemn the Isle of Man is to miss the point. </p>
<figure class="align-center ">
<img alt="" src="https://images.theconversation.com/files/193961/original/file-20171109-27130-1ft9pmc.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/193961/original/file-20171109-27130-1ft9pmc.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=450&fit=crop&dpr=1 600w, https://images.theconversation.com/files/193961/original/file-20171109-27130-1ft9pmc.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=450&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/193961/original/file-20171109-27130-1ft9pmc.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=450&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/193961/original/file-20171109-27130-1ft9pmc.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=566&fit=crop&dpr=1 754w, https://images.theconversation.com/files/193961/original/file-20171109-27130-1ft9pmc.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=566&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/193961/original/file-20171109-27130-1ft9pmc.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=566&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px">
<figcaption>
<span class="caption">The remains of Summerland.</span>
<span class="attribution"><a class="source" href="https://www.flickr.com/photos/iom_mark/1142462807/in/photolist-2JXqoB-21fVJoK-7FW988-7jiZxW-WmqvGq">iom_mark/flickr</a>, <a class="license" href="http://creativecommons.org/licenses/by/4.0/">CC BY</a></span>
</figcaption>
</figure>
<p>That jurisdiction (and many others) has been operating within perfectly legal parameters set by the UK government. For UK ministers to express surprise and distaste at revelations exposed by the leak is nothing short of political theatre. There seems to be an embedded belief that when you reach a certain income threshold, your societal obligations diminish, and you are perfectly entitled to squirrel away money in offshore financial centres. This has to change – but it can’t happen overnight.</p>
<h2>Proceed with caution</h2>
<p>Cautious reform is required. Contrary to popular depictions currently circulating, the Isle of Man is not some kind of financial rogue state, a chillier Monaco, or an English-speaking Switzerland, sitting adrift in the Irish Sea. A cursory look around its main towns of Douglas, Peel, or Ramsey tells a different story. The shadows of the old seaside economy are everywhere, which creak into life during the <a href="https://www.nytimes.com/interactive/2017/06/07/sports/Isle-of-man-TT-motorcycle-race.html">annual TT motorcycle festival</a>. </p>
<p>A walk around the backstreets of Douglas reveals bleak terraces of former boarding houses, in varying states of decay, converted into low rent flats. Social deprivation afflicts the capital, Douglas, as much as <a href="http://www.bbc.com/culture/story/20150609-britains-seaside-ruins">any other seaside town in the British Isles</a>. </p>
<p>Immediate sanctions against offshore jurisdictions will not hurt the affluent beneficiaries of tax avoidance. It will hit hundreds of ordinary Manx families dependent on the financial services sector for employment. And I’m not talking about solicitors, asset managers and bankers – I’m talking about cleaners, IT technicians and receptionists. </p>
<figure class="align-center ">
<img alt="" src="https://images.theconversation.com/files/193965/original/file-20171109-27138-fbt3b3.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/193965/original/file-20171109-27138-fbt3b3.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=490&fit=crop&dpr=1 600w, https://images.theconversation.com/files/193965/original/file-20171109-27138-fbt3b3.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=490&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/193965/original/file-20171109-27138-fbt3b3.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=490&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/193965/original/file-20171109-27138-fbt3b3.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=616&fit=crop&dpr=1 754w, https://images.theconversation.com/files/193965/original/file-20171109-27138-fbt3b3.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=616&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/193965/original/file-20171109-27138-fbt3b3.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=616&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px">
<figcaption>
<span class="caption">If banks flee the Isle of Man, local residents will suffer.</span>
<span class="attribution"><a class="source" href="https://www.flickr.com/photos/146057732@N07/32211150075/in/photolist-R5oyGt-VV6h96-TSrqPK-d8Tq23-PN3iXm-G7pbaw-MVLfu8-6gqM6C-i2N4WX-6yWaxp-Bd798u-6Q8na8-8fLVk3-6RsL3e-R21ais-6UXQXd-QRexXW-R5p1MV-q2es9S-5wax4a-ZWa6-TSrEmz-o4QKFe-o5k5oR-omxn9M-hSxprH-o5m928-pcCERp-6Q8n9Z-omN9RS-6UXQXb-oozCZR-oo5n64-o4PBFm-o4PCoU-ojMQAj-omhFfY-o5k58k-o4QLuZ-om7zLU-omPKd8-o5k5LK-6RsL3t-6QRBDh-om2XKv-ojhvwf-oozDMT-omhHaQ-o4PMiB-omPJBD">Culture Vannin/flickr</a>, <a class="license" href="http://creativecommons.org/licenses/by-sa/4.0/">CC BY-SA</a></span>
</figcaption>
</figure>
<p>Capital flight has occurred before. From the 1960s, cheap continental package holidays eroded the allure of a Manx visit, the island’s economic mainstay since the 1880s. Its entire economic structure was geared towards servicing the needs of the “visiting industry” (to adopt the colloquial term for tourism). Manx prosperity was tied to the disposable income of holidaymakers. </p>
<h2>Casino capitalism</h2>
<p>A <a href="https://www.imuseum.im/search/publication_record/view?id=mnh-museum%2014179&type=publication&tab=all&from=0&term=tourist+industry&size=80&sort=&filter=&view=&images=&ttmgp=0&rfname=&rlname=&machine=&race=&raceyear=&linked=0&pos=9">1969 government report</a> noted that collapse of this sector “could only mean that the standard of living of the Isle of Man would disappear and the island would become depopulated”. Casino capitalism was offered as a cure to revive the ailing holiday trade, against a backdrop of fierce moral opposition. </p>
<p>The first licensed casino in the British Isles, opened in Douglas by Sean Connery in 1966, was opposed by some Manx politicians on the grounds that it made the Manx treasury subservient to taxation revenue procured from multinational gambling magnates.</p>
<p>Today, the global headquarters of an online gambling business occupies a symbolically commanding position overlooking Douglas Bay. Meanwhile, casino capitalism in the form of multinational finance is indeed the roulette wheel which supplies the island’s economic lifeblood.</p>
<p>Dependency on offshore financial services – <a href="https://liverpooluniversitypress.co.uk/products/60641">facilitated by Thatcher-era deregulation</a> – stabilised the Manx economy. But alarmed Manx nationalists, fearful of the cultural cost, railed against it. This was expressed most vividly in an arson campaign by the protest group FSFO (Financial Sector Fuck Off) <a href="http://www.tandfonline.com/doi/abs/10.1080/00369229018736780">in the early 1980s</a>. </p>
<p>As in the 1970s, Manx economic and social prosperity is again reliant on one, troublingly fickle, economic sector. This time, it is asset management and offshore investment, rather than deck chairs and ice cream. Severing tax avoidance loopholes must, therefore, proceed gradually so as to protect the Isle of Man from a capital flight cliff-edge. The outcome would be a 1970s scenario of unemployment, emigration and social deprivation. </p>
<p>International wealth flows like water, settling in the jurisdiction where the tax regimes are most advantageous. A knee-jerk clampdown would spook investors and inflict severe economic damage on British Crown Dependencies – most of which lack alternative income streams. We need to instil a moral conscience among the super rich and demonstrate that their taxed wealth <a href="https://theconversation.com/tax-avoidance-might-be-legal-but-its-time-we-seriously-questioned-its-ethics-87133">provides societal good</a>. Their money – be it offshore, onshore, or in outer space – should be subject to the same tax regime as the rest of us. </p>
<p>Moral pressure and gradual legislative reform can achieve this. But don’t proceed in a way which could strip the Manx working class of their livelihoods overnight and for the second time in living memory.</p><img src="https://counter.theconversation.com/content/87146/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Pete Hodson receives PhD research funding from the Arts and Humanities Research Council. </span></em></p>From ‘holiday isle’ to ‘tax haven’: the Isle of Man is no paradise for locals.Pete Hodson, PhD candidate in Modern History, Queen's University BelfastLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/871332017-11-08T17:38:35Z2017-11-08T17:38:35ZTax avoidance might be legal but it’s time we seriously questioned its ethics<figure><img src="https://images.theconversation.com/files/193790/original/file-20171108-14205-1cfyviv.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption">
</span> <span class="attribution"><span class="source">shutterstock.com</span></span></figcaption></figure><p>Remember, remember, the 5th of November. Not, this time, for gunpowder, treason and plot. But for the news break by the <a href="https://www.icij.org/investigations/paradise-papers/paradise-papers-exposes-donald-trump-russia-links-and-piggy-banks-of-the-wealthiest-1-percent/">International Consortium of Investigative Journalists</a> (ICIJ) of the so-called “Paradise Papers”, a leak of 13.4m files detailing the financial behaviour of individual and corporate elites, many of whom use offshore financial centres to avoid paying tax in their home countries. </p>
<p>This is a major leak that not only questions the opportunities available to the wealthy in arranging their taxes, but also the extent to which governments facilitate such enduring arrangements for the benefit of an elite minority.</p>
<p>Tax takes many forms: income tax, corporate tax, land tax, capital gains tax, death tax, inheritance tax, sales tax, customs and excise tax, and value-added tax are all available to governments. Plus many more. Paying our taxes to fund public policy initiatives and investments is a central necessity of most societies – and most of us do meet these expectations. </p>
<p>But while there are those who seek to criminally evade their tax liabilities, or fraudulently deceive the government, we also see varying levels of non-compliance by others in society, raising questions about the ethics of minimising how much tax you pay.</p>
<p>For instance, there are entirely legal and approved ways of “avoiding” tax liabilities for both individuals and businesses. Reducing your tax bill through effective planning is legal, ethical – and in some forms encouraged by government-authorised schemes. For example, claiming tax relief on capital investment, saving in a tax-exempt ISA or saving for retirement by making contributions to a pension scheme are all legitimate forms of tax planning. The key point is that here we see tax relief obtained in the ways that the government intended.</p>
<p>The ethics of reducing tax liabilities becomes problematic when it is aggressively avoided through creative schemes that are not intended or authorised by the state – but which do abide by the letter of the law. It is here we see what is referred to as “<a href="https://www.gov.uk/guidance/tax-avoidance-an-introduction">tax avoidance</a>”. This is formally legal but highly questionable, seriously harmful and often unethical.</p>
<h2>Tax games</h2>
<p>The Paradise Papers have again brought tax avoidance and the underlying ethics of this to mainstream public attention. As with previous scandals, such as the <a href="http://blog.policy.manchester.ac.uk/posts/2016/04/the-panama-papers-and-the-stumbling-blocks-to-exposing-secret-activity/">Panama Papers in 2016</a> and the <a href="http://blog.policy.manchester.ac.uk/posts/2015/02/hsbc-a-criminological-perspective-on-the-bank-of-tax-cheats/">Swiss/HSBC leaks in 2015</a>, they reveal the ease with which corporations and high net worth individuals are able to organise their wealth and income transnationally, through the established global financial system, using offshore financial centres and a range of legal business structures to enable this.</p>
<p>We see corporations playing tax games by shifting profits between jurisdictions to exploit gaps and mismatches in their tax rules. We see them artificially trade with shell companies that form part of the same corporate groups, effectively doing business with themselves, to make profits disappear. This can result in little or no overall corporate tax being paid.</p>
<p>Notable individuals such as <a href="https://www.theguardian.com/news/2017/nov/06/lewis-hamilton-avoided-taxes-jet-isle-of-man-scheme-paradise-papers">Lewis Hamilton</a>, the <a href="https://www.theguardian.com/news/2017/nov/05/revealed-queen-private-estate-invested-offshore-paradise-papers">Queen</a>, <a href="https://www.theguardian.com/commentisfree/2017/nov/07/tax-bono-harming-world-poorest-glastonbury-avoidance-paradise-papers">Bono and others</a> have been criticised in recent days for avoiding their tax liabilities through such schemes. Their levels of culpability will vary – whether fully aware, wilfully blind or just plain ignorant to how these arrangements function for their benefit.</p>
<p>But we must also scrutinise how leading banks, accountancy and financial firms which seek to creatively make use of unintended legal loopholes, facilitate these tax arrangements. And the fact that many – including Appleby (Bermuda) and Estera (Cayman Islands) – are based in British Overseas Territories.</p>
<p>A further common feature of the control of these schemes is also the assistance of third-party institutions known as trust and company service providers. These firms, such as Appleby and Estera – the source of the Paradise Papers leaks – set up and maintain corporate vehicles to structure artificial or contrived financial arrangements. We must question their role.</p>
<h2>Society first</h2>
<p>While it is legal to organise finances in this way, we must question the ethics of a system that makes the ultra-rich richer and leads to <a href="https://gabriel-zucman.eu/files/AJZ2017.pdf">growing inequality</a> around the world. This goes to the fundamental nature of how we believe society should function. </p>
<p>If we focus on the harm of tax avoidance to society, rather than how it is legally defined, then we can see that it contributes to growing inequality, increases tax burdens on resident taxpayers and undermines state legitimacy. Furthermore, the government’s accommodation of those structures that facilitate tax avoidance can also be misused by those looking to conceal criminal monies. For example, the UK has seen large investment from <a href="https://www.ft.com/content/6cb11114-18aa-11e4-a51a-00144feabdc0#ixzz397vuOUvV">companies based in offshore tax havens</a> into its property market, with <a href="https://www.ftadviser.com/property/2017/03/07/billions-of-corrupt-wealth-fuelling-london-housing-crisis/">suspicious wealth</a> being used to buy high-end properties in London especially.</p>
<p>Tax avoidance not only shifts funds away from the public purse – which is even more pertinent in times of budgetary austerity and economic uncertainty (think Brexit) – but also undermines perceived social fairness. There is an improper transfer of money away from public goods.</p>
<p>Yet despite some <a href="https://www.ft.com/content/bcf2082e-b418-11e7-a398-73d59db9e399">political rhetoric</a> outlining its deleterious effect, it is not being addressed with sufficient rigour. The UK – which has sovereignty over a number of the offshore states – has made a number of pledges to tackle tax avoidance – but this has not been followed by punitive, enforcement action. </p>
<p>A <a href="http://www.ids.ac.uk/publication/taxing-multinational-enterprises-as-unitary-firms">unitary tax regime</a> – which treats a multinational business as a single entity in tax terms – may be one solution. But until there is a legal requirement for all avoidance schemes to be formally approved by the state before their use (rather than closed down after they are discovered), there will remain scope for tax entrepreneurs to avoid their liabilities.</p><img src="https://counter.theconversation.com/content/87133/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Nicholas Lord receives funding from the Partnership against Conflict, Crime and Security Research (PaCCS).</span></em></p>The morality of tax avoidance becomes problematic when it is aggressively pursued through creative schemes.Nicholas Lord, Senior Lecturer in Criminology, University of ManchesterLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/869992017-11-08T03:58:19Z2017-11-08T03:58:19ZHow the Paradise Papers reveal the tension between rock stars and the tax man<p>“It’s one for you, 19 for me” ran George Harrison’s scabrous jibe at the “Taxman” in 1966, a bitter riposte to the <a href="http://www.bbc.co.uk/news/magazine-26327114">95% supertax</a> that Prime Minister Harold Wilson’s Labour government had imposed on the very wealthy. </p>
<p>Although top rates of tax are now substantially lower across the developed world (under 50% in the UK and Australia), it’s hardly surprising that the latest international tax avoidance scandal – <a href="https://www.theguardian.com/news/2017/nov/05/paradise-papers-leak-reveals-secrets-of-world-elites-hidden-wealth">the Paradise Papers</a> – should feature rock stars in its cast. </p>
<p>The leaked papers reveal Michael Hutchence’s <a href="http://www.abc.net.au/news/2017-11-06/the-secret-deal-behind-inxs-michael-hutchences-estate/9075634">estate tied up in offshore tax havens</a> – to the possible exclusion of his surviving family. U2’s Bono has also been found to have used a firm in Malta to <a href="https://www.occrp.org/en/paradisepapers/tax-day-bloody-tax-day-bonos-lithuanian-shopping-mall-under-tax-probe">pay for a share in a Lithuanian shopping mall</a>.</p>
<hr>
<p>
<em>
<strong>
Read more:
<a href="https://theconversation.com/four-things-the-paradise-papers-tell-us-about-global-business-and-political-elites-86946">Four things the Paradise Papers tell us about global business and political elites</a>
</strong>
</em>
</p>
<hr>
<p>While they’re far from the only such cases, what distinguishes them in the public mind is the disjunction between public image and private affairs. These exposés throw into sharp relief the inconsistencies in romanticising rock. Free-sprited creativity is seen working hand-in-glove with the “suits”.</p>
<p>Sex and drugs and rock and roll, following <a href="https://www.youtube.com/watch?v=erGNSQMJ79Q">Ian Dury’s coinage</a>, might seem like a natural fit. Corporate-style tax avoidance and rock and roll less so. Rock has long railed against “The Man” on stage, but the current cases reveal a well-established and more specific hostility between stars and the taxman.</p>
<h2>Tax Exile on Main Street</h2>
<p>The grubby, druggy aesthetic of the Rolling Stones’ classic <em>Exile on Main Street</em>, recorded on the French Riviera, belied the fact that the eponymous banishment was in fact the band fleeing a tax bill and liabilities as residents in the UK. <a href="https://books.google.co.uk/books/about/The_Rolling_Stones.html?id=Zi7yAAAAMAAJ&redir_esc=y">Bill Wyman recalled</a>:</p>
<blockquote>
<p>We owed money to the Inland Revenue. There was no way could make enough money to get ourselves out of trouble, we’d be paying like 93% tax and there was no way we could earn enough to pay back what we owed.</p>
</blockquote>
<p>This decision was informed by the band’s business manager, Prince Rupert Loewenstein. <a href="http://www.tandfonline.com/doi/full/10.1080/19401159.2015.1093370">His financial stewardship helped to turn them into a global brand</a>, not least through careful choices of touring, rehearsal and recording locations to minimise tax bills. </p>
<p>If these stratagems seem to cut across the “devil may care” rebellion or heartfelt sincerity of rock, they also reveal a paradox at its core as a mass-produced, commercial form of music that inherited an anti-establishment ideology from the folk movements of the 1940s and ’50s. </p>
<p>With the Beatles’ and Stones’ upending of previous commercial and aesthetic norms aligned with a generational shift, it was, <a href="https://www.jstor.org/stable/853249">writes Professor Simon Frith</a>, “easy enough for 1960s rock fans … to claim that even if their music was commercial, it nevertheless symbolised a community”.</p>
<p>This tension between “art” and “commerce” is woven throughout popular music. The brightest stars of the musical firmament have battalions of lawyers, managers and accountants to conduct their affairs. The skills needed to negotiate the complexities of multi-million-dollar enterprises are, after all, rather different to those for recording and performing hits. </p>
<p>It’s perhaps to be expected, <a href="https://www.theguardian.com/news/2017/nov/05/revealed-michael-hutchence-adviser-used-tax-haven-to-exploit-unheard-songs">as appears to have been the case with Hutchence</a>, that some musicians have less-than-granular knowledge of how their often internecine concerns are set up. There’s a long and ignominious history of musicians falling prey to their business associates. </p>
<hr>
<p><em><strong>Read more:</strong> <a href="https://theconversation.com/drafts/87002/edit">Three strategies to fight the tax avoidance revealed by the Paradise Papers</a></em></p>
<hr>
<p><a href="http://www.independent.co.uk/news/stings-adviser-jailed-for-pounds-6m-theft-from-star-1578141.html">Sting’s financial adviser</a>, for instance, lost £4.8 million (A$8.25m) on investments that included restaurants in Australia and plans to adapt Russian military planes into passenger liners. <a href="http://articles.latimes.com/1989-09-26/entertainment/ca-257_1_elizabeth-joel">Billy Joel’s former manager</a>, likewise, lost millions on failed investments, and gave out loans of over US$2.5m (A$3.26m) to real estate and horse breeding enterprises. All without their clients’ knowledge. </p>
<p>Bono has been caught in this paradox. Keen to put distance between himself and the mechanics of U2’s business interests when challenged in 2015, he <a href="https://www.occrp.org/en/paradisepapers/tax-day-bloody-tax-day-bonos-lithuanian-shopping-mall-under-tax-probe">stated that they were</a> “just some smart people we have … trying to be sensible about the way we’re taxed”. More recently, he expressed distress at the possibility that his investments have been “<a href="https://www.theguardian.com/news/2017/nov/06/bono-lithuania-shopping-centre-profit-tax-investigation-paradise-papers">anything less than exemplary</a>”.</p>
<h2>The business of authenticity</h2>
<p>Given that such stars’ appeal – and therefore partly their commercial success – resides in a sense of something beyond the sharp-edged logistics of the corporate world, it shouldn’t be a shock that accusations of hypocrisy follow a whiff of chicanery around their business dealings. </p>
<p>Pop and rock, though, have been thoroughly tied up in the intricacies of international trade for decades, and the creative industries are <a href="https://books.google.co.uk/books?id=-daTBwAAQBAJ&lpg=PP1&pg=PT340#v=onepage&q&f=false">increasingly important to governments’ economic strategies</a>. </p>
<p>The issue runs deeper than wealthy artists who make a play on their gritty roots, like the Arctic Monkeys being propelled to fame via trenchant observations of Sheffield street life and then taken to task over <a href="https://www.channel4.com/news/tax-avoidance-george-michael-melua-arctic-monkeys-liberty">a previous tranche of tax revelations</a>, which also included George Michael and Katie Melua. They were all found to have invested in a scheme called <a href="https://www.theguardian.com/commentisfree/2017/oct/27/multinationals-tax-avoidance-gary-barlow-hmrc-corporations">Liberty</a>, recently shut down by the UK government. The scheme was set up offshore via a company created in the Cayman Islands, which they then used to avoid taxes on other income. </p>
<figure>
<iframe width="440" height="260" src="https://www.youtube.com/embed/pK7egZaT3hs?wmode=transparent&start=0" frameborder="0" allowfullscreen=""></iframe>
<figcaption><span class="caption">The Arctic Monkeys were propelled to fame via trenchant observations of Sheffield street life but were later taken to task over their tax affairs.</span></figcaption>
</figure>
<p>The perception of authenticity at the heart of international stardom is rooted in the commonality that, at the end of the day, taxes exist to support. But sustaining it commercially involves traversing a <a href="https://papers.ssrn.com/sol3/papers.cfm?abstract_id=2182046">web of jurisdictions</a>. If these contradictions have been built into rock from the outset, perhaps a sense of betrayal was inevitable. The current travails over superstar taxes are unlikely to be the last. </p>
<p>Ultimately, it will take concerted action – and co-operative <a href="https://www.ifs.org.uk/uploads/gb/gb2016/gb2016ch8.pdf">international government action</a> at that – to make tax loads at the upper end of the economic ladder more than a matter of conscience. </p>
<p>This won’t solve rock’s art-commerce dichotomy but, to <a href="https://www.youtube.com/watch?v=oqMl5CRoFdk">paraphrase the Stones</a> shortly before their own fiscal entanglements, it might help to balance the other equation of people getting what they want against what they need.</p><img src="https://counter.theconversation.com/content/86999/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Adam Behr receives funding from the UK's Arts and Humanities Research Council. </span></em></p>Rock has long railed against The Man, but problems with the taxman highlight its internal contradictions.Adam Behr, Lecturer in Popular and Contemporary Music, Newcastle UniversityLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/870022017-11-08T01:39:42Z2017-11-08T01:39:42ZThree strategies to fight the tax avoidance revealed by the Paradise Papers<figure><img src="https://images.theconversation.com/files/193693/original/file-20171108-6758-ptnatb.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption">The first strategy is to require the public disclosure of country by country reporting of company tax affairs.</span> <span class="attribution"><span class="source">Shutterstock</span></span></figcaption></figure><p>The release of more than 13 million financial and tax documents known as the “<a href="https://www.icij.org/investigations/paradise-papers/">Paradise Papers</a>” show that the <a href="https://panamapapers.icij.org/">Panama Papers</a> last year and <a href="https://www.icij.org/investigations/luxembourg-leaks/">LuxLeaks</a> in 2014 were just the tip of the tax avoidance iceberg. It also shows that governments have not learnt their lesson and taken action.</p>
<p>Both the <a href="http://www.oecd.org/tax/beps/">OECD</a> and <a href="https://www.ag.gov.au/CrimeAndCorruption/AntiCorruption/Documents/G20High-LevelPrinciplesOnBeneficialOwnershipTransparency.pdf">G20</a> made recommendations several years ago that would have increased transparency of corporate taxes, and <a href="http://onlinelibrary.wiley.com/doi/10.1111/1475-679X.12101/abstract">extensive research</a> shows that this is effective in limiting corporate tax avoidance. Recently, we also <a href="http://www.aph.gov.au/Parliamentary_Business/Committees/Senate/Economics/Corporatetax45th/Public_Hearings">recommended to a Senate committee</a> that the government limit the use of some financial products that can be re-purposed for tax avoidance.</p>
<p>The Paradise Papers detail the complex offshore financial and tax activities of celebrities, politicians, world leaders, and more than 100 multinational entities. Here are three things that could help curb the problem.</p>
<hr>
<p>
<em>
<strong>
Read more:
<a href="https://theconversation.com/explainer-the-difference-between-tax-avoidance-and-evasion-39777">Explainer: the difference between tax avoidance and evasion</a>
</strong>
</em>
</p>
<hr>
<h2>1) Require public disclosure of tax affairs</h2>
<p>The first strategy is to require the public disclosure of country by country reporting of company tax affairs (CbCR). This idea comes out of the OECD’s <a href="https://www.oecd.org/ctp/BEPSActionPlan.pdf">action plan</a> on Base Erosion and Profit Shifting (BEPS). It would increase tax transparency by requiring corporations to make specific disclosures on the tax paid in different countries, by project and region. </p>
<p>Doing so would allow any interested party to observe and understand how corporations transfer profits from high to low tax jurisdictions. With such specific information it would more difficult for companies to hide their tax affairs and provide impetus and justification for the public to pressure tax avoiders.</p>
<p>This idea <a href="http://www.internationaltaxreview.com/Article/3059190/The-tide-turns-towards-country-by-country-reporting.html">was strongly opposed by the majority of multinational entities’ in most countries</a> on the basis of commercial sensitivity of the information, the compliance burden, and that it might distort the view of a company’s true contribution to an economy. However, such argument is spurious as large corporations already have sophisticated systems in place that are capable of producing this information. </p>
<p>Nevertheless, <a href="http://www.bakermckenzie.com/en/insight/publications/2017/04/country-by-country-reporting-in-the-uk/">some European countries</a> (notably the United Kingdom and France) do require that large multinational companies publicly disclose their tax affairs, country by country. </p>
<p>The laws in the United Kingdom fostered a <a href="http://onlinelibrary.wiley.com/doi/10.1111/1475-679X.12101/abstract">2010 campaign</a> that named and shamed companies who were not disclosing subsidiaries in tax havens. That campaign made the UK authorities tighten disclosure requirements, and after companies started disclosing their tax haven subsidiaries they became less tax aggressive. </p>
<p>Unfortunately, there is no similar mechanism in Australia for the provision of information to the public to pressure corporations that avoid taxes.</p>
<h2>2) Create a register of who benefits</h2>
<p>The next idea <a href="https://www.ag.gov.au/CrimeAndCorruption/AntiCorruption/Documents/G20High-LevelPrinciplesOnBeneficialOwnershipTransparency.pdf">comes from the G20</a>, and is to set up a public register of beneficial ownership (in other words, who owns the companies). </p>
<p>Earlier this year the Australian Treasury released a <a href="https://treasury.gov.au/consultation/increasing-transparency-of-the-beneficial-ownership-of-companies/">consultation paper</a> looking at this idea. At the time, Minister for Revenue and Financial Services Kelly O'Dwyer noted that: </p>
<blockquote>
<p>Improving transparency around who owns, controls, and benefits from companies will assist with preventing the misuse of companies for illicit activities including tax evasion, money laundering, bribery, corruption, and terrorism financing. </p>
</blockquote>
<p>However, the policy is still at the consultation stage. </p>
<p>Interestingly, a <a href="https://www.theguardian.com/australia-news/2017/may/31/beneficial-ownership-register-may-be-waste-of-time-tax-chief-tells-mps">recent comment</a> by ATO Commissioner Chris Jordan seems to both support and dismiss a public register. </p>
<blockquote>
<p>A register of beneficial ownership is just, you know, what someone says someone else owns so, you know, it could be good but it could be just a lot of ‘stuff’ that doesn’t really help us. </p>
</blockquote>
<p>The United Kingdom has <a href="https://www.gov.uk/government/uploads/system/uploads/attachment_data/file/606611/beneficial-ownership-register-call-evidence.pdf">set up</a> a beneficial ownership register, but it is too early to know what the impact has been.</p>
<h2>3) Limit some financial products</h2>
<p>A third strategy is one we <a href="http://www.aph.gov.au/Parliamentary_Business/Committees/Senate/Economics/Corporatetax45th/Public_Hearings">presented to a Senate committee</a> and might have tackled some of what the multinational conglomerate Glencore was alleged to have been doing in the Paradise Papers. </p>
<p><a href="https://www.icij.org/investigations/paradise-papers/room-of-secrets-reveals-mysteries-of-glencore/">Glencore</a> is alleged to <a href="https://www.theguardian.com/news/2017/nov/05/glencore-australian-arm-moved-billions-through-bermuda">have used cross currency interest rate swaps</a> and is <a href="http://www.smh.com.au/business/the-economy/glencore-reveals-its-being-audited-by-ato-over-taxes-20150513-gh0g51.html">under investigation</a> by the Australian Tax Office. These are financial instruments that may be legitimately used by companies to manage foreign currency risk, for instance when borrowing debt denominated in foreign currencies.</p>
<p>However, these instruments may also be used by multinationals to avoid tax, by shifting profits between subsidiaries in different countries. Unfortunately, it is very difficult to determine whether these instruments are being used for legitimate purposes or for avoiding tax. <a href="http://www.aph.gov.au/Parliamentary_Business/Committees/Senate/Economics/Corporatetax45th/Public_Hearings">Our proposal</a> is to prohibit or limit their use, as has been done in Hong Kong. </p>
<p>Hong Kong is a special case, as it has a very low tax rate, but some form of this policy might be adopted in Australia and elsewhere. </p>
<hr>
<p>
<em>
<strong>
Read more:
<a href="https://theconversation.com/four-things-the-paradise-papers-tell-us-about-global-business-and-political-elites-86946">Four things the Paradise Papers tell us about global business and political elites</a>
</strong>
</em>
</p>
<hr>
<p>With three large leaks, spanning a number of years, Australians have a right to ask why the problem of tax avoidance seems to be stagnating, if not getting worse.</p>
<p>Perhaps the hackers who leak these documents are getting better. But the likely answer is that it is the result of inaction by governments around the world, and Australia in particular. </p>
<p>Recommendations from the OECD, G20, and even our submission to a Senate inquiry show there are ideas out there to solve some of these issues. And countries such as the United Kingdom, Hong Kong and France have made efforts to increase public transparency of corporate tax affairs and limit the use of certain financial instruments. </p>
<p><a href="http://onlinelibrary.wiley.com/doi/10.1111/1475-679X.12101/abstract">The research</a> from these countries show that these proposals can be successful if enacted. </p>
<p>In the end, failure to cut down on tax avoidance is not due to a lack of proposals. The failure to enact these proposals feeds into the distrust of all governments as they don’t appear to be doing a very good job at limiting tax avoidance.</p><img src="https://counter.theconversation.com/content/87002/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>The authors do not work for, consult, own shares in or receive funding from any company or organisation that would benefit from this article, and have disclosed no relevant affiliations beyond their academic appointment.</span></em></p>The ideas are already out there to tackle some of the tax avoidance highlighted by the Paradise Papers.Roman Lanis, Associate Professor, Accounting, University of Technology SydneyBrett Govendir, Lecturer, Accounting Discipline Group, University of Technology SydneyLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/869462017-11-06T15:10:44Z2017-11-06T15:10:44ZFour things the Paradise Papers tell us about global business and political elites<figure><img src="https://images.theconversation.com/files/193412/original/file-20171106-1008-i811uj.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption">Trouble in paradise: Bermuda is at the centre of the Paradise Papers leak.</span> <span class="attribution"><span class="source">shutterstock.com</span></span></figcaption></figure><p>The so-called <a href="https://www.theguardian.com/news/series/paradise-papers">Paradise Papers</a> may sound familiar – leaked documents from a law firm that specialises in offshore services reveal how the global elite avoids paying taxes. Even the name has the same ring to it as last year’s <a href="https://theconversation.com/panama-papers-remarkable-global-media-operation-holds-rich-and-powerful-to-account-57196">Panama Papers</a> expose. But the Paradise Papers are different, reflecting the complexity of the global offshore tax system.</p>
<p>Panama is generally considered among tax haven experts as one of the least reformed corners of the offshore world. International rules regarding tax evasion and avoidance are intended to help national governments to pursue their own offenders, but the Panama Papers revealed that the country was being used primarily by the business and political elites of countries like Russia, China and many more in Latin America and Asia; countries where the governments are closely linked to business and which are less likely to use tools provided by new international rules to pursue offenders. Hence, relatively few Americans or Europeans were caught in the Panama story. And Mossack Fonseca, the law firm at the centre of the leak has since <a href="https://panamapapers.icij.org/20170327-mossfon-prosecutor-update.html">been discredited</a>. </p>
<p>The Paradise Papers reveal the goings on of the elites of the offshore world – this time in the supposedly highly-regulated havens of the Cayman Islands, Bermuda, Singapore and the like. All places that received a fairly clean bill of health during the OECD peer review process only <a href="http://www.oecd.org/countries/bermuda/peerreviewreportofbermuda-phase1legalandregulatoryframework.htm">a few years ago</a>. The law firm at the centre of this new leak, Appleby, <a href="https://www.theguardian.com/news/2017/nov/05/offshore-law-firm-appleby-response-no-evidence-wrongdoing-paradise-papers">insists</a> there is “no evidence of wrongdoing” in any of the revelations.</p>
<p>Nonetheless, the Paradise Papers will tell us a lot about the activities of business and political elites <a href="https://www.icij.org/investigations/paradise-papers/">of well-regulated countries like the US and UK</a> – implicating big multinationals such as Nike and Apple, and individuals including the British Queen.</p>
<figure class="align-center ">
<img alt="" src="https://images.theconversation.com/files/193435/original/file-20171106-1041-x7nh3y.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/193435/original/file-20171106-1041-x7nh3y.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=394&fit=crop&dpr=1 600w, https://images.theconversation.com/files/193435/original/file-20171106-1041-x7nh3y.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=394&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/193435/original/file-20171106-1041-x7nh3y.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=394&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/193435/original/file-20171106-1041-x7nh3y.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=496&fit=crop&dpr=1 754w, https://images.theconversation.com/files/193435/original/file-20171106-1041-x7nh3y.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=496&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/193435/original/file-20171106-1041-x7nh3y.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=496&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px">
<figcaption>
<span class="caption">The Queen’s private estate invested millions offshore.</span>
<span class="attribution"><a class="source" href="https://www.flickr.com/photos/comsec/7345367150/in/photolist-cc5VKd-bUHbjH-cc5qrL-ckj7L5-e5CGSV-bUHGf8-cc5Wky-bUFp5p-8WgE3G-2NMs8x-Kd7Sr-bUHbrZ-cc5WiC-cc5szu-cc5XRm-cc5Xrh-cc5XZ3-bUHdaM-bUHd7v-cc5Xzs-bUHGK2-bUHHcp-bUHfW4-cc5Xc1-cc5rZL-bUHdfK-cc5Y8h-cc5v7s-bUHHMM-cc5WMj-bUHfbK-bUHfet-bUHGEz-cc5XLy-cc5XWW-cc5X3U-cc5vdL-cc5s4s-bUHcWx-bUHH1v-bUHH3i-cc3AWL-cc3Ba9-cc3Cvm-cc5u5U-cc3AZm-cc3CkG-cc3Bmf-cc3B45-cc3Boo">The Commonwealth</a>, <a class="license" href="http://creativecommons.org/licenses/by-nc-nd/4.0/">CC BY-NC-ND</a></span>
</figcaption>
</figure>
<h2>1. Tax avoidance is a booming industry</h2>
<p>Clearly, jurisdictions such as the Caymans Islands and Bermuda that levy no income tax, capital gains tax, VAT, sales, wealth or corporate tax, still attract a great deal of businesses. Why, for instance, has the Duchy of Lancaster, the Queen’s private portfolio, invested in two offshore funds, in Cayman and Bermuda? After all, the Queen pays tax only <a href="http://www.independent.co.uk/news/royal-fortune-stays-secret-the-queen-has-been-forced-into-paying-taxes-and-the-last-thing-she-wants-1472403.html">voluntarily</a>. </p>
<p>A more charitable interpretation is that any big investor who is seeking to diversify their portfolio would inevitably end up using offshore funds. The papers <a href="https://www.theguardian.com/news/2017/nov/05/revealed-queen-private-estate-invested-offshore-paradise-papers">show</a> that about £10m (US$13m) of the Queen’s private money was invested offshore – a very small percentage of her wealth. There is nothing illegal about this but the ethics of it have been questioned.</p>
<p>Practically, the entire wealth investment industry – the industry that invests for the rich and the wealthy of our world – operates through the offshore world. And the reason why is simple. Each fund or transaction, or aeroplane or yacht, or whatever that one cares to register in the Caymans or Bermuda, is not subject to tax. And it’s hidden from public view.</p>
<h2>2. Secrecy prevails through trusts</h2>
<p>Despite a <a href="https://www.ft.com/content/ab8ee980-b6f3-11e6-ba85-95d1533d9a62">spate of new regulations</a>, the Paradise Papers show that anyone who wishes to conceal their affairs from competitors, allies, governments or the public can still do so with great ease. And they can do so through the facilities of a “trust”, <a href="https://www.taxjustice.net/2017/02/13/trusts-weapons-mass-injustice-new-tax-justice-network-report/">an archaic Anglo-Saxon instrument</a> that serves as a foolproof shield from scrutiny. </p>
<p>We have learned, for instance, that Wilbur Ross, the US secretary of commerce, had <a href="https://www.theguardian.com/news/2017/nov/05/trump-commerce-secretary-wilbur-ross-business-links-putin-family-paradise-papers">commercial links to Vladimir Putin’s family</a>, which operated through a system of linked trusts located in various offshore jurisdictions. I do not think that even the <a href="https://theconversation.com/explainer-what-is-a-special-counsel-and-what-will-he-investigate-in-the-trump-administration-77952">Mueller inquiry</a> in the US into the Trump administration’s links with Russia could have pierced the veil of secrecy offered by offshore trusts. </p>
<p>But the leaked documents from law firm Appleby reveal that any complex business deals that would involve concealment and subterfuge would work their way through trusts. It is high time we do something about these trusts.</p>
<h2>3. Highly complex tools are used</h2>
<p>The Paradise Papers show how complex financial innovations such as the use of derivatives and financial swaps arrangements, can be used for tax avoidance. This is an area of avoidance that is normally not well understood and scantily studied. </p>
<p><a href="https://coffers.eu/">New research</a> colleagues and I are conducting, however, has found that cross-currency interest rate swaps are used pervasively in tax minimisation mechanisms. It is difficult to detect and involves a parent and subsidiary companies swapping a loan in one currency to another. This swaps the risks and the interest rate of the original currency for the subsidiary’s – a legitimate risk minimisation instrument. At the same time, this facilitates moving funds offshore to low tax jurisdictions.</p>
<h2>4. The law needs to change</h2>
<p>Many professional service firms operate through offshore jurisdictions. They all claim to be highly professional, following not only the letter, but also the spirit of the law. </p>
<p>But if these firms are not directly liable for the activities of their clients, the offshore world will continue to thrive. These firms take advantage of <a href="http://www.taxresearch.org.uk/Blog/2010/07/07/tax-avoidance-evasion-compliance-and-planning/">regulatory loopholes</a> to arbitrate between different rules and jurisdictions in order to minimise taxation. The question is for how long such practices are going to be considered legitimate. </p>
<p>The Paradise Papers reveal how little the world really knows about the level of tax avoidance that takes place. UK citizens, for instance, can legally invest in offshore funds and set up companies in those havens. But they <a href="https://www.gov.uk/government/publications/ten-things-about-offshore-assets-and-income/ten-things-about-offshore-assets-and-income">must</a> reveal these holdings to the tax man. We do not know whether those named in the papers did, and we do not know whether the tax authorities will do something about those who did not. We only know that a lot is going through offshore. The Paradise Papers show that, despite promises of the opposite, opacity is still pervasive in the offshore world.</p><img src="https://counter.theconversation.com/content/86946/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Ronen Palan received funding from NORAD to study tax evasion and avoidance in developing countries. Research mentioned in this article is funded by an EU Horizon 2020 COFFERS grant. He is a senior adviser to the Tax Justice Network and on the Board of Directors of TJN Israel.</span></em></p>Unlike the Panama Papers, the latest leak shines a light on the elites of the offshore world.Ronen Palan, Professor of International Politics, City, University of LondonLicensed as Creative Commons – attribution, no derivatives.