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By Mihar Dias (C) Copyright March 2023
Daim or Bill Gates like other high net-worth individuals with cash to spare would always be on the look out for legitimate tax havens.
In light of recent exposè through Pandora Papers it's worth noting that high net worth individuals, Daim and Gates included, would seek maximum benefits from tax havens around the world.
However, we do not know for sure whether Daim did make use of off shore financial centres for his personal gains. But if it was legitimately used to store his legitimate wealth in a tax haven, then there was no reason to raise the alarm.
On the other hand, there are other individuals from Malaysia, as revealed by Pandora papers who might want to hide their ill gotten gains in these tax havens.
For them, these same tax havens would be equally attractive, like a Pirate's Cove, to hide their wealth because of the secrecy offered by the offshore financial centre service providers.
Perhaps, these are the ones whom local enforcement authorities should be investigating and not those high net worth business savvy individuals with incomes from legitimate sources.
First, let's be clear about what a tax haven really is. These are also sometimes referred to as "offshore financial centers" for example Labuan with its very own LOFC started under Daim's stewardship, years ago.
In essence, off shore financial centres are places where foreign investors pay low or even zero tax to site their businesses or invest their wealth.
"By relocating their funds to tax havens, businesses and investors may avoid paying high taxes. Examples of countries that also rank high in secrecy and have low-to-no taxes are the British Virgin Islands, Bermuda, Guam, Taiwan, and Jersey."
Apparently, there is no residency or physical presence required for investors to benefit from any tax haven's policies.
In addition, these tax havens do not share financial information of investors with tax authorities from foreign countries. They operate in complete secrecy.
However, journalists managed to obtain the information somehow and later leaked them as part of the Pandora's Papers.
For countries with tax havens, the above policies will eventually attract a generous amount of capital inflow.
For instance, local authorities may then impose minimal fees, charges, or some tax on foreign investments in order to generate revenue for purposes of administration.
This inflow of funds, which may be quite substantial over the years, even in low-to-zero rates in tax havens can help facilitate economic growth and development in countries with tax havens.
Agrarian Ireland is a good example of a successful tax haven.
Ireland's "headline" corporate tax rate is only 12.5% reduced from 32% in 1999. This Corporate Tax System is a central to Ireland's economy. In 2016-17, foreign firms paid 80% of Irish corporate tax, employed 25% of the Irish labour force (paid 50% of Irish salary tax), and created 57% of Irish OECD non-farm value-add.
As of 2017, 25 of the top 50 Irish firms were U.S.-controlled businesses, representing 70% of the revenue of the top 50 Irish firms.
By 2018, Ireland had received the most U.S. Corporate tax inversions in history, and Apple was over one-fifth of Irish GDP. Academics rank Ireland as the largest tax haven; larger than the Caribbean tax haven system.https://en.wikipedia.org/wiki/Corporation_tax_in_the_Republic_of_Ireland?wprov=sfla1
Another example is an Irish subsidiary of Microsoft that recorded a profit of $315bn (£222bn) in 2020. The profit generated by Microsoft Round Island One is equal to nearly three-quarters of Ireland's GDP - even though the company has no employees.
The subsidiary, which resides in Bermuda for tax purposes collects licence fees for the use of copyrighted Microsoft software around the world, recorded an annual profit of $314.7bn in June 2020.
The majority of the profit - $301.1bn - related to the surplus and assets transferred from two liquidated subsidiaries, is not taxable under common global tax principles as an "unrealised gain".
There are many examples of tax planning available on the web that may help corporations take advantage of what's on offer by Ireland, BVI, Jersey or Bermuda.
Business savvy people like Bill Gates and may be Daim are fully aware of tax havens worldwide. They would naturally gravitate towards those that offer most benefits for their corporations.
Anyway, their activities according to law are indeed legal. These wealthy individuals have a team of legal experts to help guide through the complicated maze that ordinary folks find puzzling.
But for the crooked they would take advantage of the secrecy offered by tax havens to hide their ill gotten gains advised by equally savvy legal and financial experts to evade taxation and investigations.
They are the ones who would be looking over their shoulders all the time and having sleepless nights for fear of being nabbed by authorities.
Anwar made an announcement recently that he was after Malaysians listed in Pandora's papers and that Daim in particular would have sleepless night as a result of investigations to be initiated by Malaysian authorities.
However, for Daim and Bill Gates we assume that they sleep well at night knowing that their wealth are in safe havens.
Mihar Dias is a content creator under the Newswav Creator programme, where you get to express yourself, be a citizen journalist, and at the same time monetize your content & reach millions of users on Newswav. Log in to creator.newswav.com and become a Newswav Creator now!
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