Introduction and the Problem of Offshore Tax Evasion

Abstract

It is estimated that the offshore banking industry shelters over $7.5 trillion, which costs governments lost revenues of at least $200 billion a year. Another estimate puts the amount of money in offshore tax haven accounts in 2010 at $21 trillion (such a figure is comparable to the size of the economies of the United States and Japan combined). A recently announced “big data” leak containing over 2.5 million tax haven documents revealed dealings of over 70,000 taxpayers and also of over 120,000 offshore corporations and trusts. The “big data” (which was followed by an even bigger data leak in 2016) was uncovered by over eighty-six journalists in forty-two countries. Commenting on the leak as part of his ground-breaking research on big data and tax haven secrecy, Professor Arthur Cockfield observed, “For the first time, the secret world of tax havens was revealed in great detail.” He notes that offshore service providers — such as trust and finance companies — take advantage of tax haven secrecy to help individuals engage in global financial crime through various tactics including assisting clients to launder or “normalize” illegal income so that funds can be repatriated to their home.