Paradise Papers – The Tip of The Iceberg….
Whether it is Bono, the Queen or some of the cast of Mr. Brown’s Boys, it is clear that many of the global elite, have gone out of their way to pay as little tax as possible. Absolutely unfair without doubt. Many would say absolutely morally wrong. However, it is extremely important that Ireland, Europe and the OECD adopt the right policies in order to ensure the weaker members of society, the ordinary tax paying public, who are not as privileged as the elite, are protected by providing a more transparent and fairer system. Just because it is immoral will not stop people or companies wanting to pay less tax. When Ireland closed a loophole in the Law, Apple moved its offshore structure to Jersey. In addition, just because your business or operations are offshore does not mean that you are avoiding tax. So, the policy has to be right, fair and transparent and it has to be implemented in all OECD countries.
Another interesting consideration in relation to these types of scandal, is the definition of a “tax haven”. Where does the definition start and end? The whole concept and how they operate is extremely difficult to police. Ireland clearly provides beneficial tax rates to foreign companies and those involved in the manufacturing industries – do we consider it a tax haven as such? For the most part, we don’t but many other countries are of the view that Ireland is a tax haven. Great Britain has benefitted extensively through its overseas territories such as the British Virgin Islands, the Cayman Islands and Anguilla having condoned their status as “tax havens” since the early part of the twentieth century. Are we prepared to sacrifice Ireland’s favoured tax status? The consequences could be significant for many businesses. Incidentally, the consequences would be equally significant for the likes of the British Virgin Islands, in the event that they were barred from offering this type of financial services, would they end up trading in narcotics or other illegal activity? Some thought needs to be put into the consequences of effectively stamping out tax avoidance.
It is extremely important that tax avoidance issues are urgently addressed by the European Union and the OECD. One of things that really strikes me about the Paradise Papers leak, leaving aside the obvious importance of effectively dealing with the inequality and unethical nature of tax avoidance, is the very serious breach of privacy and data protection laws. As the journalists pick over the bones of the Paradise Papers, do we sit back and accept that the end justifies the means? What if your own private data is stolen from your firm or from your law firm or accountancy practice? What about other Appleby clients that might not be part of a tax avoidance scheme? There needs to be positive action from the entire OECD block to ensure the protection of these rights too.
Without doubt the landscape in relation to offshore activity is changing and so is the tax haven environment. We advise clients that have operations in many countries and we have completed many cross-border transactions. We have also advised clients in relation to privacy and data protection issues. Come and talk to us at Adams Law LLP if you need some advice.
