You can follow the thought process. If you are trying to hide money and avoid tax, then investing in an offshore centre where there is little or no transparency, offers potential opportunities for those individuals and companies wanting secrecy from their dealings. In fact, The World Bank has estimated that corruption adds up to 10% to business costs globally. According to the OECD around 5% of global GDP is corrupt. Crime organisations and corrupt individuals frequently use companies to hide the proceeds of bribery, corruption and organised crime, which costs the UK, at least £24 billion each year. The problem is a big problem.
On the other side is privacy. The debate has reached new heights in recent months. We have all heard about Facebook. There is the introduction of GDPR due on 25 May 2018 in the UK. Lawyers are talking about how some high profile figures are using privacy to stop press intrusion. Privacy is a big debate.
As always, the answer is about balance.
Is it fair that some individuals find ways to evade tax? Evasion is actually illegal and therefore they should be punished under current legislation. Nevertheless, people do avoid tax. If an individual or company finds ways to avoid tax, it’s perfectly legal, albeit, perhaps not always in the spirit of the law. There is nothing wrong limiting the tax you pay, but the reason why people try to do avoid tax is that they believe the amount they pay is unfair. It’s finding the balance.
Equally, if you have accumulated wealth, you may want to be private about it. Why? Others may want to take it from you. There is a fear of theft but also fear of life. That may sound extreme, yet wealthy individuals could end up being a target for unscrupulous people. As such, you want to access an offshore centre not because you are seeking to avoid tax, but instead, want greater privacy. Hence the lack of transparency is a good thing if you want privacy. How do we find the balance between transparency and privacy?
We may have to live with the corruption. It’s what balance of corruption can we all accept? That may sound a little crazy. Surely there should be zero corruption. Perhaps not. Its all about balance. If you are interested, take a look at the book, “The fable of the bees”. It talks about public benefit from private vices.
How do you work out what is fair to you?
If you think the amount of tax you pay is unfair, start by writing down exactly why you believe that to be the case. If you can’t articulate your thoughts clearly, its possible your feeling of fairness have little substance. Without substance, you then may make poor decisions which you never needed to make. Poor decisions can be expensive not only financially, but for your own peace of mind and your family’s peace of mind. When you are clear about what you believe is fair, come and talk to us. Let us challenge your thinking. Then we can help you ind the right balance and the right tools to achieve your aims. You will then have balance.
As for the tax centres, with what appears to be so much tax evasion and corruption, they may be better off focusing on helping individuals with privacy concerns rather than saving tax.