Pandora Papers Call Attention to Secret Trust Accounts in US-Based Tax Havens
The investigative journalism report called “Pandora Papers,” called attention to the role played by tax havens in the tax evasive-nature of offshore investments. However, the many discussions clamoring for further investigations about the tax evasions via offshore investments, should not overlook the fact that tax evasion by way of secret trust accounts and shell companies is also rampant in the U.S.
After all, not a few states in the U.S. have been offering lower, to no tax at all, as a way of attracting wealthy families, and big corporations, including financial institutions to do place their assets and do their business in their respective state.
Similar to the low or no tax incentives offered by offshore tax havens, several states in the U.S. are also allowing investors to shield their wealth from public scrutiny by using shell companies in hiding their identities.
While Biden’s Treasury Secretary Janet Yellen was able to convince members of the G20 group to push for a minimum global corporate tax of 15% to end the international tax competition, the actual implementation still depends on legislative action that will be taken by each country.
If so, will the US-based tax havens be compelled to impose at least 15% tax on all revenues earned in their jurisdiction? Will they be barred from allowing the licensing of shell companies being used as tools for financial secrecy?
What Did the Pandora Papers Reveal about the US-Based Tax Havens
The “Pandora Papers” also revealed the number of secret accounts held in trust in the states of South Dakota, Delaware and Florida.
While South Dakota seems to be a small rural jurisdiction that rarely makes headlines for financial news, the Pandora Papers released by the International Consortium of Investigative Journalists (ICIJ) had a lot of financial secrets to reveal about South Dakota’s role as enabler of tax evaders.
South Dakota is in fact harboring 81 secret trust accounts, which is twice more than the 37 secret trust accounts held by Florida and the 35 held by Delaware.
According to the explosive ICIJ, a company known as South Dakota Trust Company LLC, even boasts of managing $100 billion in assets belonging to more than 300 centimillionaires and 100 billionaires. including international families based in 54 countries
Among the political figures using South Dakota’s secret account is Ecuador president Guillermo Lasso, and family members who inherited the secret trust account of former Dominican Republic vice president, Carlos Morales Troncoso.
As of 2019, more than 100 trust companies act as administrators of secret trust accounts in South Dakota, which has a combined worth of $3.8 billion.
The report revealed that Delaware, Pres. Joe Biden’s home state is requiring payment of some business tax and substantial fees, but is likewise allowing secrecy of financial accounts. Leaked documents linked to corporate organizations show how international earnings are transferred to a single Delaware account registered under the anime of a shell corporation.
These are only examples that show how not all questionable financial deals are linked to offshore investments; or why not all offshore investments placed in tax havens are of dubious nature.
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