Published On: Tue, Apr 5th, 2016

The Most Popular Tax Havens In The Panama Papers

The Most Popular Tax Havens In The Panama Papers

 

A data leak of over 11 million documents (2.6 terabytes of data) has revealed how the rich and powerful hide their wealth in global tax havens. Mossack Fonseca, the Panamanian law firm at the centre of the leak, has helped its clients evade tax and launder money for 40 years. The British Virgin Islands is the most popular tax haven in Mossack Fonseca’s files with 113, 648 offshore companies incorporated there. Panama came second with just over 48, 000. (see chart)

U.S. companies hoard billions of dollars offshore

A recent study has revealed that U.S. companies hold an estimated $2.1 trillion in profits in overseas tax havens. Many of these companies have subsidiaries in Ireland and collectively, they would owe the United States $620 billion if they repatriated their profits there. Apple is the worst offender with $181 billion, followed by GE and Microsoft.

 U.S. Tech Companies Hoard Billions in Offshore Tax Havens

According to a recent study on the use of tax havens in 2014, the 500 largest American companies hold more than $2.1 trillion in accumulated profits overseas to avoid U.S. taxes. About one quarter of that amount (549.7 billion) is hoarded abroad by ten tech companies alone, as our chart illustrates. Among them Apple has parked the largest amount of cash outside the United States. The iPhone maker hoards a whopping $181 billion overseas. That is almost twice as much as second-ranked Microsoft ($108.3b) and roughly three times the total of IBM, which ranks third in the tech-list with foreign cash holdings of $61.4 billion. Cisco, ranked fourth, stands out with as many as 59 tax haven subsidiaries.

The study, conducted by Citizens for Tax Justice and the U.S. PIRG Education Fund, notes that the number of tax haven subsidiaries is not directly connected to the amount of taxes dodged by a company. On the contrary, some companies now report fewer subsidiaries in tax haven countries than they did in 2008 while reporting significant increases in the amount of cash they hold abroad. The study offers two possible explanations for this occurrence: First of all some companies may choose not to report all of their subsidiaries because the SEC’s penalties for failing to do so are pretty lax and secondly companies could simply consolidate more income in fewer offshore subsidiaries, often in structures dubbed “Double Irish”.

 

Infographic: The Most Popular Tax Havens In The Panama Papers | Statista

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