ISSN (Print) - 0012-9976 | ISSN (Online) - 2349-8846

A+| A| A-

How Tax Havens Are Misused by the Rich and Powerful

The Panama Papers have exposed the ugly underbelly of globalisation.

The disclosure of the Panama Papers, the biggest-ever leak of confidential information in human history, has highlighted yet again how the rich and the powerful use—rather, misuse—tax havens not just for avoiding payment of taxes but for a wide range of nefarious activities: from money laundering to funding wars, from trading in human beings to drug dealing. It is often claimed by clever accountants and smart lawyers that providing offshore banking and financial services is not necessarily illegal, leave alone evil. But there is much that is not explicitly stated about the working of 90-odd tax havens scattered across the globe, including some that are located within national jurisdictions of countries like the United States (Delaware and Florida) and in principalities or microstates in Europe (Monaco and Liechtenstein). The secrecy that is guaranteed in these tax havens ensures a conducive environment for corrupt political leaders, their relatives and associates, businesspersons and celebrities to park their funds and take them out at will. Money moves rapidly across multiple tax jurisdictions, a phenomenon called “round-tripping,” to make it difficult for regulatory authorities to ascertain the “beneficial owners” of companies. Equally importantly, the line that divides legal forms of tax avoidance and illegal forms of tax evasion is so thin as to be virtually non-existent. The issues that have been raised go beyond loss of revenue to the damage done to democratic institutions and ensuring greater transparency in public life.

Few of the names that have been highlighted in the Panama Papers are those of citizens from Western countries. They are instead from Russia, China, Saudi Arabia, Malaysia, Syria, Argentina, Morocco, Pakistan, India, Argentina, Azerbaijan, Qatar, the United Arab Emirates and various countries of Africa. It would, however, be erroneous to conclude from the media coverage of the leaked documents that politicians and businesspersons in advanced capitalist countries are paragons of virtue. Far from it. On the contrary, the one country that is responsible for overseeing the working of as many as 18 tax havens happens to be the United Kingdom.

Dear Reader,

To continue reading, become a subscriber.

Explore our attractive subscription offers.

Click here


To gain instant access to this article (download).

Pay INR 50.00

(Readers in India)

Pay $ 6.00

(Readers outside India)

Back to Top