Tag Archives: offshore

Business, Finance, News, Observation, Politics

Pandora Papers: ‘Biggest-Ever’ Bombshell Leak Exposes Financial Secrets of the Super-Rich

Above: Photo Collage /Lynxotic / Original Image by ICIJ

“This is the Panama Papers on steroids.”

In what’s being called the “biggest-ever leak of offshore data,” a cache of nearly 12 million documents published Sunday laid bare the hidden wealth, secret dealings, and corruption of hundreds of world leaders, billionaires, public officials, celebrities, and others.

The bombshell revelations—known as the Pandora Papers—were published by the International Consortium of Investigative Journalists (ICIJ) and include private emails, secret contracts, and other records obtained during a two-year investigation involving more than 600 journalists in 117 countries and territories.

“This is the Panama Papers on steroids,” said ICIJ director Gerard Ryle, referring to the 2016 exposé of the tax-evading secrets of the super-rich. “It’s broader, richer, and has more detail.”

According to The Guardian:

More than 100 billionaires feature in the leaked data, as well as celebrities, rock stars, and business leaders. Many use shell companies to hold luxury items such as property and yachts, as well as incognito bank accounts. There is even art ranging from looted Cambodian antiquities to paintings by Picasso and murals by Banksy.

“There’s never been anything on this scale and it shows the reality of what offshore companies can offer to help people hide dodgy cash or avoid tax,” said ICIJ’s Fergus Shiel, who added that the people in the files “are using those offshore accounts, those offshore trusts, to buy hundreds of millions of dollars of property in other countries, and to enrich their own families, at the expense of their citizens.”

The leaked documents reveal how some of the world’s wealthiest people avert the financial consequences of their misdeeds by using offshore entities. Dozens of current and former world leaders feature prominently in the files, including Russian President Vladimir Putin, Jordanian King Abdullah II, and former British Prime Minister Tony Blair.

While most of the richest Americans do not appear in the files, The Washington Post reports that “perhaps the most troubling revelations for the United States… center on its expanding complicity in the offshore economy.”

Chuck Collins, author of The Wealth Hoarders: How https://bookshop.org/a/565/9781509543496Billionaires Pay Millions to Hide Trillions, and co-editor of Inequality.org at the Institute for Policy Studies, said in a statement that “the U.S. has become the weak link in stopping global crime and wealth hiding.”

“States like South Dakota and Delaware have morphed their laws to attract billions, sometimes illicitly obtained, from around the world,” he said. “We in the U.S. should be embarrassed that we’ve become a magnet for kleptocratic funds.”

Collins added that the Pandora Papers show “it is time for U.S. lawmakers to shut down the hidden wealth system that allows for such aggressive tax avoidance and the sequestering of wealth.”

ICIJ said Sunday that the “publication of Pandora Papers stories comes at a critical moment in a global debate over the fairness of the international tax system, the role of Western professionals in the shadow economy, and the failure of governments to stanch the flow of dirty money into hidden companies and trusts,” and that the documents “are expected to yield new revelations for years to come.”

Originally published on Common Dreams by BRETT WILKINS and republished under a Creative Commons license  (CC BY-NC-ND 3.0).

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Business, Climate Solutions, News, Observation

‘Enough Is Enough’: Report Shows Big Oil’s Offshore Tax Loopholes Cost US at Least $86 Billion Per Year

“We continue to bankroll the very fossil fuel companies responsible for the climate crisis, then wonder why our planet is on fire.”

A new report released Wednesday identifies $86 billion worth of offshore tax loopholes that a dozen U.S.-based oil and gas companies exploit each year as part of a “tax bonanza,” a finding that comes as climate justice advocates push Congress to eliminate subsidies to the fossil fuel industry.

“Our government cannot continue to bankroll climate destruction,” Friends of the Earth tweeted Wednesday.

The report (pdf), compiled by Friends of the Earth, Oxfam America, and BailoutWatch, reveals the consequences of “two esoteric provisions in the tax code worth tens of billions of dollars to Big Oil’s multinational majors,” including ExxonMobil, Chevron, ConocoPhillips, and other polluters most responsible for the climate emergency.

As a result of the GOP’s 2017 tax law, corporations that drill overseas benefit from special treatment under the Global Intangible Low-Tax (GILTI) framework, which covers Foreign Oil and Gas Extraction Income (FOGEI).

The Treasury Department estimates that repealing the Trump-era exemption for FOGEI would raise $84.8 billion in revenue from just 12 companies that are currently eligible for the carveout, the report notes.

“It is unfortunate but not surprising that the handful of companies benefitting from these loopholes are lobbying to protect their special treatment.”
—Chrive Kuveke, BailoutWatch

Another corporate handout, the so-called dual capacity loophole, is “a longstanding gimmick” wherein fossil fuel giants “artificially inflat[e] their foreign tax bills” to evade U.S. taxes.

Although they are permitted to claim tax credits for taxes paid to foreign governments, U.S. companies are not allowed to do so for non-tax payments such as royalties. 

“In practice, however, the categories often are commingled—particularly when companies make a single combined payment including both taxes and fees,” the report explains. “A foreign country may even try to disguise non-tax payments as a tax, knowing that in many cases a multinational company may receive a foreign tax credit from its home country. Existing regulation gives dual capacity taxpayers vast latitude to assert what portions of their payments are taxes eligible to offset U.S. tax bills.” 

Eliminating the dual capacity loophole would raise at least an additional $1.4 billion, according to the Biden administration, while the Joint Committee on Taxation puts the figure somewhere between $5.6 billion and $13.1 billion. The report points out that “the estimates vary so widely in part because we have precious little visibility into Big Oil’s payments to governments—and that’s just how the companies want it.”

“As Democrats propose closing loopholes to help cover the cost of their $3.5 trillion reconciliation package,” the report states, “these obscure subsidies present a rare chance to act on climate, fund infrastructure, and promote tax fairness in a single stroke.”

While the House Ways and Means Committee’s markup of the Build Back Better Act includes a tax reform proposal that would reverse the FOGEI carveout and the dual capacity loophole, it would leave intact at least $35 billion in federal subsidies for domestic fossil fuel production—despite President Joe Biden’s call to phase out polluter giveaways over a decade.

House Democrats’ failure to stop showering Big Oil with public money—a move supported by a majority of people in the U.S. and many, though not all, Democratic lawmakers—has drawn progressives’ ire.

“The House bill made a decent start by targeting Big Oil’s international tax loopholes, but it went nowhere near far enough,” Lukas Ross, Climate and Energy Justice program manager at Friends of the Earth, said Wednesday in a statement.

Senate Majority Leader Chuck Schumer (D-N.Y.) “needs to lead on climate and ensure that all $121 billion in fossil fuel subsidies are repealed in the final package,” Ross added.

According to Daniel Mulé, policy lead for Oxfam’s Extractive Industries Tax and Transparency project, “U.S. Big Oil companies like Exxon and Chevron have fought tooth and nail to keep the payments they make to governments around the world a secret, while paying lip service to the global movement for payment transparency.”

“This secrecy,” said Mulé, “has a potential tax impact in the U.S. as well, as it makes it all the more difficult to discern if U.S. oil and gas companies are illegitimately inflating their foreign tax credits.”

The report draws attention to several legislative proposals that would do away with subsidies for domestic fossil fuel production as well as tax exemptions for foreign extraction, including:

The report was released the same day members of the Congressional Progressive Caucus urged House leaders to include a repeal of domestic fossil fuel subsidies in the Democrats’ Build Back Better Act.

“Instead of creating jobs,” the progressive lawmakers wrote, the subsidies “widen the profit margin of fossil fuel companies.”

The report emphasizes that fossil fuel champions—including the Exxon lobbyist who was caught on camera discussing how the company benefits from offshore tax loopholes and intends to further undermine climate action—are fighting hard to preserve billions of dollars in taxpayer-funded handouts.

“Big Oil isn’t going quietly,” said Chrive Kuveke, an analyst at BailoutWatch. “Since Biden became president, it is unfortunate but not surprising that the handful of companies benefitting from these loopholes are lobbying to protect their special treatment.”

Originally published on Common Dreams by KENNY STANCIL and republished under Creative Commons.

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