A few days ago, the ICIJ (International Consortium of Investigative Journalists) revealed the Pandora Papers. These documents contain the names and financial activities of numerous influential and ultra-rich people. There are over 300 Indian citizens too, varying from billionaires to top government officials, celebrities, public figures, and sportsmen.
The word “Pandora” is derived from the expression- ‘Pandora’s box’ of Greek mythology which essentially denotes a source of unseen trouble.
What are the Pandora papers? What do they reveal?
They are 11.9 million leaked files from global corporate services firms. These documents reveal the ultimate ownership of assets settled in private off-shore trusts and investments including cash, shareholding, and real estate properties held by offshore entities. They demonstrate how the world’s super-rich avoid paying taxes. Pandora papers are basically a sequel to the Panama Papers of 2016, in the sense that both these papers leaked financial data of persons of interest.
Two years ago, the ICIJ, which is an international network of more than 100 media organizations spread across more than 100 countries, was given substantial data which disclosed how the various global elites handle their money and hide them across different countries without paying taxes. There are several ways to do this, but the most common is to set up off-shore accounts.
Off-shore accounts are generally set up in tax havens- the countries where it is easy to establish companies such as Samoa, Belize, Panama, the British virgin islands, Singapore, or New Zealand which offer tax advantages.
People set up complex multi layered trust structures with genuine as well as bogus intentions in these places. Many of them have a two fold objective- which is to hide their real identity and to safeguard investments, shareholdings, etc. from law enforcers and creditors.
But the interesting fact is that it isn’t necessarily illegal to do so in every situation. It depends upon the individual. There are legitimate reasons for setting up trusts. But trusts are also used by some of them as secret vehicles to park ill-gotten money, hide income to evade taxes, for criminal activities and to protect wealth from law enforcers.
To find out if someone actually did something illegal or just immoral, we need to check individual cases. If morality is to be considered, the whole revelation of Pandora Papers shows a downside of the capitalist system. Because, the richer that you get, there are more doors are open to you to earn money, save money and evade taxes. An average man does not have the money to pay for expensive tax advisors or to buy properties in other countries.
To solve this issue, the governments of major countries and organisations like USA, European Union, China are discussing international regulations. If these countries come together to formulate some system of international regulation, then we could prevent such acts. Another solution being discussion is the Global Minimum Tax. According to it, if all countries agree to set up a minimum tax rate, then tax evasion can be prevented. But it is yet to be seen how successful this can be if it come into force.