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The Paradise Papers: What is it and Who is Affected?

The latest leak is turning tax havens into tax hell

In recent weeks, the scope of the Paradise Papers has widened, with a lot of well-known names seemingly indicted. But what exactly is it and who has been affected so far? Here’s a breakdown of what we know so far:

Similar to 2016’s ‘Panama Papers,’ the Paradise Papers is a massive leak, started off by the German newspaper, Süddeutsche Zeitung. It has involved nearly 100 media partners in 67 countries, including The Guardian, The New York Times, BBC’s Panorama and the International Consortium of Investigative Journalists.

The Paradise Papers is the fifth major leak of financial papers in the past four years and includes information of high-profile politicians, celebrities and high-net-worth individuals who have filtered their cash through offshore accounts and into a ‘tax haven’ in a bid to avoid paying tax on profits and assets.

One of the major companies to be outed for making the tax evasion possible is Appleby, one of the world’s top offshore law firms, with offices in 10 different jurisdictions. Its clientele includes some of the wealthiest companies and individuals in the world and they have even won the title of “Legal 500 UK Offshore Firm of the Year” on numerous occasions. This year it even sponsored the America’s Cup yacht competition.

The problem a lot of governments and investigators face is that big offshore law firms such as Appleby find loopholes, in order to make financial dealings legal. A lot of tax evasions are in fact legal but face more of an ethical problem in the way that they exploit gaps in financial legislation.

So far some of the following companies/individuals have been outed by the Paradise Papers:

  • The Isle of Man passed a law that would help tax evaders.
  • The Queen’s private estate invested about £10m offshore and Prince Charles campaigned to alter climate change agreements without disclosing his private estate had an offshore financial interest in what he was promoting.
  • Donald Trump’s commerce secretary Wilbur Ross is doing business with Vladimir Putin’s son-in-law through a shipping venture in Russia. The Paradise Papers revealed millions in offshore accounts.
  • Canadian Prime Minister Justin Trudeau’s chief fundraiser and senior adviser Stephen Bronfman was involved in the movement of millions of dollars to offshore havens.
  • The Paradise Papers have revealed that Lord Ashcroft, one of the conservative party’s biggest donors, had an unknown trust sheltering his vast wealth.
  • The world’s largest mining company, Glencore, secretly loaned tens of millions of dollars to an Israeli billionaire in order to secure a controversial mining agreement in the Democratic Republic of the Congo.
  • Apple reacted to criticism of its tax affairs by secretly shifting key parts of its empire to Jersey and as a result have been able to maintain an ultra-low tax rate.
  • Nike has also been involved in tax havens and zero tax rates.
  • Stars of Mrs Brown’s Boys used offshore accounts in order to save thousands of pounds in income tax.
  • Formula One World Champion Lewis Hamilton used the Isle of Man tax evasion scheme in order to avoid taxes on a £16.5m jet.
  • A Lithuanian shopping mall partly owned by U2 star Bono is under investigation for potential tax evasion.

Many more names have been revealed and much more will probably come out. With a massive increase in offshore accounts, tax envisions and havens since the 70’s it is highly likely that more papers will reveal shocking secrets in the future. However, it seems even more likely that more of the super wealthy will continue to exploit the system in order to benefit themselves and more companies/individuals will continue to get away with it.

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