The report was compiled following the Panama Papers scandal in Apri last year, where more than 11 million files were leaked from Panamanian law firm Mossack Fonseca which revealed how the rich and powerful around the world use offshore shell companies registered in tax havens to avoid paying tax.
STM, which has offices in Cyprus, Gibraltar, Jersey, Malta, came in at 44 on the list of 140 most-frequently featured international intermediaries in the leaked documents, described as “instrumental to the tax dodging business”.
STM was contacted for comment at the time of publication.
The list also includes private bank J. Safra Sarasin, Swiss-headquartered private bank Lombard Odier, accountancy firm RSM and international expansion experts TMF.
TMF denies claims
TMF Group told International Adviser that “it strongly refutes any suggestion by this report that it endorses or facilitates alleged ‘tax dodging’. Tax dodging, otherwise known as tax evasion, is illegal. TMF Group is therefore seeking legal advice to address these erroneous claims.”
The TJC said it analysed millions of files from the exposé as well as those from the offshore leaks scandals in 2013 and the Bahamas leak in 2016, all available on The International Consortium of Investigative Journalists (ICIJ) website.
The campaign group found that Hong Kong is the number one destination where intermediaries operated have helped their wealthy client avoid paying tax.
However, of the 140 identified international intermediaries, 127 (nearly 90%) have at least one active business unit or subsidiary located in Europe.
“This shows that Europe is a highly desirable location for international intermediaries,” said the report.
Tougher sanctions
As a result, the TJC has called on the European Commission (EC) to investigate the role of intermediaries in offshore tax evasion and impose stronger sanctions on firm found guilty of aggressive tax planning.
“We understand intermediaries [are acting] as a go-between for a client seeking an ultimate offshore service provider in order to create (and sometimes run) one or several offshore entities. These intermediaries are often unknown to the public but play a key role in the existence of shell companies in tax havens,” it said.
In November, the EU announced it was looking at plans to force financial advisers to report “aggressive” tax planning schemes as part of its crackdown on tax evasion and avoidance.
Worldwide network
Many of the intermediaries on the list had a number of subsidiary branches, especially in places such as Jersey and Switzerland.
Other countries where advisers, lawyers and corporate institutions regularly practice tax avoidance is the UK, US, Taiwan, Switzerland, Singapore, the Bahamas, China, Panama and Indonesia.
“This shows that the issues uncovered in the Panama Papers or the Bahamas Leaks are global in scope, reaching way beyond the countries their names highlight,” added the report.
