Tax Havens Countries – Money Laundering or Even Tax Evasion ?

For a long time, Liechtenstein has been known as a tax havens, although, in recent times, the nation has made efforts to change which image and reposition itself as a traditional financial middle.

Public criticism erupted within 2000 when two worldwide reports criticized the permissiveness of their financial controls as well as noted that the banking program allowed gangs from The USSR, Italy, and Colombia in order to launder money from legal activities.

So much so that the Business for Economic Cooperation and also Development (OECD) began to take notice of the country’s financial regulations, especially after the 2008 crisis.

The actual countries most affected by deficiency of income decided to do everything possible to bring back assets concealed tax havens. Under these types of pressures, Liechtenstein gradually cools its laws, reaching duty agreements with several nations.

Then began a new phase for a small country that will bring secret millionaires of the history and that has been governed for hundreds of years by the same family.

Among mountains, rivers and castles seem a realm of these that exist in the stories, however, in reality, one could imagine this a gigantic bank that goes giant capitals and in which the word democracy is not generally heard in the conversations from the royal subjects.

When is it lawful to have an account in a Tax Havens?


The media exposed by the Panama Papers discuss hidden accounts in income tax havens, money laundering or even tax evasion. But the individuality indicated in the scandal insist upon not doing anything incorrectly.

The scandal has a worldwide reach: it goes through Argentina and Mexico to be able to Ukraine and Russia, this passes through Spain and also the United Kingdom, it arrives inside China and splashes completely with Saudi Arabia, amongst many others.

But Mossack Fonseca, the firm at the center of the leak, says that will in 40 years of presence he has never been billed in any court.

In the eleven million leaked documents show up politicians, athletes, and musicians. And the general reaction continues to be to deny the illegality of their actions. Only the best Minister of Iceland offers resigned.


Is it legal to have an account in a tax haven?

Some countries consider Panama a tax haven, others eliminated it from their blacklists.

Some countries consider Panama a tax haven, others eliminated it from their blacklists.

According to experts consulted by BBC Mundo on whether it is legal to have an account in a tax haven, the answer is a resounding “yes”.

“It’s not illegal,” says Robert W. Wood, managing partner of the WOOD LLP law firm, a taxation specialist in San Francisco.

Regarding US citizens, Wood adds: “It is also perfectly legal for a person to own a company abroad that simply maintains bank accounts or a foreign trust with accounts, shares …”.

Using the same words, Daniel Lejtman, public tax accountant, partner of the Lisicki & Litvin studio in Buenos Aires.

“There is nothing illegal about opening an account abroad,” says Lejtman.

And the same point specialists from countries like Argentina, Spain or Mexico.

So, when is it illegal?

“What is illegal is to have any of these two types of accounts or companies without informing the authorities,” says Wood.
While, according to Lejtman, “the illegal thing is for a person not to declare those funds or the results generated by those companies (as profits) in their resident countries.”

And this requirement is present globally.

“In all countries, it is illegal for a taxpayer not to declare income anywhere else in the world,” Wildo Moya, professor of Economic and Commercial Law at the Catholic University of Chile, told BBC.

The controversial role of that country in the international financial system

And Moya clarified that “in countries like Chile, USA, Spain and Germany”if the offshore accounts or companies are not declared and taxes are not paid, it is considered a “crime or infraction that can end up in prison depending on the specific legislation “.

One of the most prominent personalities mentioned in the documents is the Argentine president, Mauricio Macri, appointed to participate in a society founded in the Bahamas.

And from his government, they insist on the idea that there is nothing illegal about it.

But what is a tax havens?

Mossack Fonseca is a Panamanian firm that was dedicated to creating partnerships in tax havens and that is involved in the scandal for the “Panama Papers”.

Tax havens are a territory that offers foreign individuals and companies little or no tax burden in a stable environment politically and economically.

This is usually combined with the fact that they provide little or no financial information to foreign tax authorities.

The term “tax haven” always “smells bad, but investments are legal,” as long as they are declared, insists Lejtman.

Individuals and companies that do not have their residence in a tax haven can take advantage of the regimes of these countries to avoid paying taxes in their countries of origin.

And at that time is when it would become an illegal operation, because the countries of residence are going to demand that the accounts or offshore companies that registered movements or profits abroad be declared, according to the experts.

What are the Panama Papers?

All analysts agree that opening an account or company in a tax haven is not illegal.
“A tax resident has to pay taxes in the country for their local activities and for what they earn in another part of the world,” says Lejtman.

That is why there are bilateral agreements between countries with “mechanisms to avoid double international taxes”, he clarifies.

That is, the countries agree not to charge twice the same tax.

In this way, the taxpayer can excuse himself from paying a tax in his country for a gain accrued abroad if he already paid it. Of course, in the case of tax havens, it almost certainly has contributed little or nothing.

What are the tax havens?

For the European Commission, the Seychelles Islands are considered a tax haven.
In mid-2015, the European Commission published a black list of tax havens considered as noncooperative in the fight against fraud and tax evasion.

For the EC, these territories are considered tax havens, and are:

Andorra, Liechtenstein, Guernsey, Monaco, Mauritius, Liberia, Seychelles, Brunei, Hong Kong, Maldives, Cook Islands, Nauru, Niue, Marshall Islands, Vanuatu, Anguilla, Antigua and Barbuda, Bahamas, Barbados, Belize, Bermuda, British Virgin Islands, Cayman Islands, Grenada, Montserrat, Panama, Saint Vincent and the Grenadines, Saint Kitts and Nevis, the Turks and Caicos Islands, and the US Virgin Islands .

However, the countries that can be considered “tax havens” for the EC, may not be for the whole world, since, as the experts explained to BBC Mundo, this depends on the exchange of bilateral tax information.
For example, Argentina and Spain do not consider Panama, involved in the recent scandal of the “Panama Papers”, as a tax haven since they maintain agreements for the mutual exchange of information.

And France has just announced its intention to put Panama back on its private list.
And why open an offshore account?

There are different reasons why accounts or offshore companies are opened, according to experts.

There are different reasons why accounts or offshore companies are opened, according to the experts.
“The advantage of these places (tax havens) is that they do not provide information to third parties and this is legal,” said Lejtman.

And many of them also do not require a declaration of where that money came from.
Unlike the rest of the countries that “each one sets certain conditions for foreigners to invest,” he added.
Could the Panama Papers scandal change the outcome of the presidential elections in Peru?

Another reason to open an offshore account may be related to the economic problems of the countries.

“There may be some country with instability that leads a person to create offshore company or open accounts abroad to protect their money and this is not illegitimate,” as long as it is declared

Tax Havens Countries – Money Laundering or Even Tax Evasion ?
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