India Broadband Forum

Preeti_20

Moving money overseas has become a common procedure for hiding money. Offshore banking creates tax havens, as well as protecting money from public scrutiny. Sweden has long been the prime destination of wealth holders of exceptional means. The Swiss even hid Nazi gold till after the millennium with no questions asked. Recently Sweden announced that much tax information would be shared with other industrial countries, this would be too alleviate the pains of the economic downturn. Sudden shifts in the transparency of banking sent many account holders seeking new companies to hold their wealth.

Hiding money is nothing new. Phrases such as “putting money under the mattress” are common vernacular. Howard Hughes, wealthiest man in the world at one time, was obsessed with protecting his money from the government. Hughes declared all his corporations as non-profits. When he did this the tax code has no method of verifying whether or not a company was truly “non-profit”. Abuse such as this has lead to many changes of the tax code, now companies are required to meet many criteria to obtain non-profit status and benefits. Many began seeking new ways to avoid paying taxes, at this time offshore banking became far more prominent.

The US has many loopholes and exceptions in its tax code. Among the most commonly exploited involves offshore banking in the Caribbean. By setting up a corporation on these islands, an individual can claim that most profits are not made in the US. This substantially shields corporations from reporting or paying taxes on much money. Rupert Murdoch, owner of Fox, has been scrutinized for using this technique to reduce Fox’s tax burden to approximately six percent. Banking tourism has become commonplace as a tax shelter and many Fortune 500 companies actually have their charters located on these small islands.

The economic downturn has created much pressure to collect all taxes owed to push down the deficit. Overlooking tax infractions was commonplace but with the current financial situation this should be coming to an end. Seeking to end these practices, many foreign governments have been pressured by the international community to adapt their banking codes to allow transparency. Major players in the offshore banking game are co-operating, traditional tax havens such as Sweden and Luxemburg are prime examples of countries changing towards an open system. The process has not been without resistance, much of the pressure for openness has been brought by the UN and World Bank. As these governments have grown, so has the economic power they can wield on countries that do not agree to the rules. Despite changing much of the banking rules, much of the Caribbean has shown no desire to change regardless of consequences.

Offshore banking has a rich history. While some business has used offshore banks to ease conducting commerce in other countries, others have used it to abuse the tax code. Government vigilance has been on the rise in combating tax cheats in an attempt to restore balance to the system. Regardless, offshore banking will be apart of the future for both good and bad reasons.

matthew

Well yeah you're right its a common practice to those rich and powerful people in the government and private sectors as well ...its so sad that the laws have many loopholes and the lawmakers should amend some of it so that businessmen can pay the correct taxes of what is due to the government..

savvyeyty

I never knew that the Nazis we're able to keep some of their money through off-shore banking. Not to mention that they've been a client of Sweden. And that was in the brink of World War! But you know what, I think off-shore banking is a perfect way to keep your money safe from taxes already. And that sadly, I don't think the government would ever have a full-proof way of stopping it.

matthew

hey savvyeytey..your right on this one the government cant stop it..unless if the person involve is a high ranking government officials and of which he will be investigated .. and probably file a case against him/her..