The revelation of the investigation called Panama Papers generated a scandal worldwide that involves political leaders, celebrities and athletes, who would have this type of accounts to avoid paying taxes.
Some 140 world politicians are involved in an investigation called Panama Papers, which reveals the creation of offshore companies in tax havens to evade taxes and hide assets.
What is an offshore company?
– Are companies that are established outside the country of residence
– These companies are created in tax havens to avoid paying taxes
– People or companies decide to make their investments in tax havens since the tax the burden is much higher in their countries of residence
– Offshore companies obtain great tax advantages, confidentiality, and security
– These companies do not pay different taxes as they should pay in their country: inheritance tax, wealth tax, consumption tax, income tax (profits), etc.
– The owner of the company is not even the real owner since in many cases they are front men
– Their constitution is not illegal; however, these companies, which are relatively affordable and easy to build, can be used to hide assets, money from illicit activities or to hide money from the tax authorities or the public authorities of the countries of residence.
What is a tax haven?
– It is a country that exempts from paying taxes to foreign investors who hold bank accounts or constitute companies in their jurisdiction
– Citizens and companies resident in their own country are obliged to pay taxes.
However, in these territories, they enjoy a total exemption or at least a significant reduction of taxes.
– The paradises offer total confidentiality on the accounts to their clients, especially taking into account that they lack -or very laxly- have agreements with other nations to report on operations.