"I figured it would be pretty difficult, because I’m not rich and don’t have a team of tax lawyers to oversee my money, and because the EU and US governments have been cracking down on tax havens by imposing stricter tax-sharing requirements,” Adam Davidson, a co-founder of National Public Radio’s Planet Money radio series, writes, in a column that will appear in the magazine section of the New York Times this Sunday.
“So I proceeded with some caution”.
Davidson describes how he started out Googling “company registration tax haven” to find someone who might be able to help him to get started, and eventually settles on Belize as the home for his new shell company, “because it would be exempt from all Belizean taxes”, and because “I’ve been to Belize and like the place”.
Singapore was suggested as a sensible place to stash his fledgling operation’s money.
Soon, Davidson discovers that although setting up an account may be easy, managing one is expensive.
“It’s not really worth the cost for anyone other than wealthy investors looking to put aside money, tax-free, for future generations,” he observes. “Or for large multinationals who prefer to centralise their global cash-flow stream in a place that doesn’t tax corporations, or require a lot of financial reporting.”
Davidson goes on to note that the scale of offshore tax evasion is probably huge, though “there is no definitive way to know”. This leads him to consider America’s “most ambitious tax-recovery plan in history, the Foreign Account Tax Compliance Act”.
While unpopular among foreign banks, governments and Americans living abroad, its “more complex rules could actually mean more business for offshore centres”, he speculates, since “by the time FATCA is in full force, in 2017, truly wealthy individuals and corporations will almost certainly have used their resources to find more intricate loopholes”.
To read Davidson’s piece in its entirety on the New York Times’s website, click here.
