Panama Papers Affair Widens As Database Goes Online (bbc.com)

In late April, it was reported there would be a huge new 'Panama Papers' data dump on May 9th. The report did not disappoint as today the Panama Papers affair has widened, with a huge database of documents relating to more than 200,000 offshore accounts posted online. The database can be accessed at offshoreleaks.icij.org. The papers were leaked by a source known as "Jony Doe," and the papers belonged to the Panama-based law firm Mossack Fonseca. The International Consortium of Investigative Journalists (ICIJ) decided to make the database public despite a "cease and desist" order issued by the law firm.

Comments

Re:eventually, doesn't all of this lead

[Sarten-X]

Not really. The point of having an "offshore account" is to keep money somewhere financially better than one's own country, primarily to avoid taxes.

For instance, let's say I'm going to be making a large transaction, such as selling a luxury yacht and buying a bigger one, but I live in a country where such a transaction would be taxed heavily. It is financially beneficial for me to set up a shell company in a foreign country, sell that company my current yacht (for a small-but-legal price), then have that shell company sell the yacht and collect the income. Taxes on the income would be paid, but at the low rate of the foreign country. Then the shell company can borrow money from me to buy the new bigger yacht, and pay me a small amount in interest on that loan, which conveniently works out to be exactly the cost of renting the yacht to me, so it's a legitimate practicing business.

The foreign company can then also hire crew for the boat, under a contract with another company (possibly from a third country) to provide labor, so my crew doesn't have to be subject to my own country's labor laws.

The fun part is that not only is this legal, but in the United States, it's a First Amendment right. Courts have upheld that you have the right to decide (except for discrimination) who you will do business with as a matter of free expression, summarized in the common suggestion to "vote with your wallet". If I choose to sell my yacht to a foreign company at a huge loss, that's my choice. From then on, it's entirely a foreign business, and my home country's laws have virtually no effect.

Now, eventually if I want to sell my yacht and bring my money back home, that's another matter... then my country's laws can have an effect, and I can be taxed heavily, but if I don't need the money, then there's no reason to move it from its foreign tax haven.