Offshore Tax Evasion and Piercing the Veil of Swiss Bank Secrecy (250-300 words)
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Tax-HavenCrackdownLeadstoWhack-a-Mole-WSJ.pdf
6/11/2020 Tax-Haven Crackdown Leads to Whack-a-Mole - WSJ
https://www.wsj.com/articles/tax-haven-crackdown-leads-to-whack-a-mole-1459879228 1/5
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https://www.wsj.com/articles/tax-haven-crackdown-leads-to-whack-a-mole-1459879228
MARKETS | FINANCIAL REGULATION
Tax-Haven Crackdown Leads to Whack-a- Mole ‘Panama Papers’ show desire persists for places to hide wealth
The skyline of Panama City, where the law �irm Mossack Fonseca is based. PHOTO: CARLOS JASSO�REUTERS
By Updated April 5, 2016 6�57 pm ET
Tom Fairless
6/11/2020 Tax-Haven Crackdown Leads to Whack-a-Mole - WSJ
https://www.wsj.com/articles/tax-haven-crackdown-leads-to-whack-a-mole-1459879228 2/5
FRANKFURT—International efforts to crack down on tax evasion and money laundering have turned into something of a game of whack-a-mole, as users of secretive offshore structures turn from traditional havens toward more exotic locations.
The so-called Panama Papers, revealed this week by the U.S.-based International Consortium of Investigative Journalists and other media groups, show how some clients of Panama City-based law firm Mossack Fonseca & Co. allegedly were able to dodge sanctions and avoid taxes.
The Wall Street Journal hasn’t independently verified the leaked material. Mossack Fonseca said this week that its operations were “beyond reproach” and it has never been accused or charged with criminal wrongdoing.
The emergence of a tax scandal in Panama “is no surprise,” said Pascal Saint-Amans, director for tax at the Organization for Economic Cooperation and Development, an international body that has helped coordinate the global fight against tax evasion.
“We see very significant progress toward transparency from all tax havens…except Panama and Vanuatu,” he said.
Governments across the advanced world revved up their crackdown against tax avoidance and evasion in the wake of the last decade’s financial crisis and great recession, driven by the need to close gaping budget holes and respond to a series of scandals involving leaked documents.
Other recent leaks have involved HSBC Holdings PLC’s private bank in Switzerland, which is alleged to have provided services for tax evaders. The bank said at that time that its Swiss business had been “overhauled.” Another cache of documents involved ways Luxembourg helped multinational companies to lower their tax bills.
6/11/2020 Tax-Haven Crackdown Leads to Whack-a-Mole - WSJ
https://www.wsj.com/articles/tax-haven-crackdown-leads-to-whack-a-mole-1459879228 3/5
The sustained clampdown has encouraged people to look at alternative tax havens “further afield and even more exotic,” said Marc Sanders, a board member of international tax advisory firm Taxand.
Switzerland, Luxembourg and other jurisdictions have come under sustained pressure from a swath of postcrisis legislation on both sides of the Atlantic. The U.S. government led the charge in 2010 with its Foreign Account Tax Compliance Act, or
FATCA, which requires foreign financial institutions to report identities of their American customers and any assets they hold.
That has led to a series of settlements between U.S. authorities and Swiss banks.
The European Union quickly followed suit, successfully pressuring countries including Switzerland and Luxembourg to share information on accounts held by their citizens abroad. Last summer the EU “named and shamed” 30 non-co-operative tax jurisdictions, based on data from individual EU countries.
“Even British jurisdictions are under pressure,” said Ronen Palan, a City University of London professor who has written books on tax havens. He named the Channel Islands, which include Jersey and Guernsey.
By contrast, “Panama is independent and not trying to compete with the others on supposedly cleaning up its act,” Mr. Palan said.
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6/11/2020 Tax-Haven Crackdown Leads to Whack-a-Mole - WSJ
https://www.wsj.com/articles/tax-haven-crackdown-leads-to-whack-a-mole-1459879228 4/5
Mr. Saint-Amans said Panama, which isn’t an OECD member, has dragged its feet on recent policy initiatives, including the exchange by national authorities of bank- account information on request or automatically, and a multilateral convention on mutual assistance in tax matters. “They decided one way or another to remain quite a secretive jurisdiction,” he said.
Panamanian government officials couldn’t be reached to comment.
In a lengthy statement online, Mossack Fonseca pointed out that the Financial Action Task Force—an intergovernmental body set up in 1989 to help combat money laundering—removed Panama from its list of uncooperative jurisdictions in February.
The FATF at the time praised Panama for “significant progress” in addressing strategic deficiencies in combatting money laundering and terrorism financing. An FATF spokesman couldn’t be reached to comment.
French tax authorities, however, on Tuesday restored Panama to their list of noncooperative countries in the wake of this week’s reports.
Other jurisdictions may be benefiting from the clampdown on traditional tax havens in the West.
Mr. Palan said he sees “signs of movement to Asia” in data on global bank savings and deposits published by the Bank for International Settlements, a central bank for central banks. “The shift is clearly to Singapore, Dubai and Hong Kong,” he said.
Still, global efforts to combat tax evasion have encouraged more than 500,000 people to expose offshore accounts in recent years, and yielded an additional €50 billion ($57 billion) of taxes, estimates Mr. Saint-Amans.
6/11/2020 Tax-Haven Crackdown Leads to Whack-a-Mole - WSJ
https://www.wsj.com/articles/tax-haven-crackdown-leads-to-whack-a-mole-1459879228 5/5
And the pressure isn’t letting up. In November the leaders of the world’s 20 largest economies pledged to overhaul global standards to crack down on tax evasion. The Dutch and U.K. governments have indicated they will introduce public registers showing the ultimate owners of companies. And the EU aims to produce its own “black list” of uncooperative tax havens.
But signing agreements doesn’t yet mean victory can be declared over tax havens, experts said.
“Even in ancient Rome tax-free zones existed,” Mr. Sanders said. “There will probably always be countries which are willing to cooperate with such structures.”
Write to Tom Fairless at [email protected]
Appeared in the April 6, 2016, print edition as 'Tax Haven Crackdown Leads to Global Whack-a-Mole.'
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