Leaked Tax Haven Data Spurs Controversy in U.S., World

That wealthy people employ tax havens in efforts to protect their wealth is not particularly shocking. But in recent weeks, it’s become a little clearer just how prevalent the use of the havens is and how interconnected they appear to be.

The clarity is the result of the analysis of a group in the Washington, D.C., area known as the International Consortium of Investigative journalists of some 2.5 million emails and banking documents that came by way of an undisclosed leak. The information the group has released is being cited by some as likely to trigger a major string of tax controversies around the globe.

The ICIJ, made up of reporters from various large news outlets around the world, says that what the reams of information provided by this unnamed source included was data on 122,000 trusts held in offshore accounts in 10 countries. A good majority of the accounts and shell companies are housed in the British Virgin Islands.

In broader terms, the analysis estimates that the world’s wealthy have socked away something in the neighborhood of $20 trillion dollars in the offshore banks. Some reports about the leaked data say that a number of governments are beginning to take action to try to identify and correct possible cases of tax evasion.

So who are the most noteworthy of the elite? Many are said to be government officials and individuals close to them from countries such as Russia, Canada, Pakistan, Thailand and Mongolia.

Some 4,000 U.S. citizens are named in the report by the ICIJ. The array of individuals includes doctors and dentists and alleged Wall Street swindlers. Several fairly notable individuals named in the report no longer hold U.S. citizenship, possibly for tax purposes.

What ripples these revelations are likely to have in the context of possible tax prosecutions is unclear. As we have noted before, the U.S. Treasury Department is moving aggressively to find Americans with offshore accounts and hold them accountable for any possible owed taxes.

Source:ICIJ.org, “Secret Files Expose Offshore’s Global Impact,” Gerard Ryle, Marina Walker Guevara, Michael Hudson, Nicky Hager, Duncan Campbell and Stefan Candea, April 3, 2013

Tags: Blog, Tax Controversies