November 29, 2021

Paper firms in tax havens up 60 pct.

Pin It

Towel-tax-haven-shutterstock-630x400-1By Yoon Ja-young From the Korea Times

Conglomerates are increasingly setting up paper companies in tax havens such as the Cayman Islands, stirring controversy that they may be aiming at creating secret funds or avoiding paying taxes.

The number of such companies in these havens increased 60 percent last year.

According to an analysis of the country’s top 40 conglomerates by Chaebul. com, a research firm on large businesses, the number of their subsidiaries in the world’s 10 major tax havens stood at 86 as of the last year, up 59.3 percent from a year ago.

The 10 tax havens are the Cayman Islands, Panama, British Virgin Islands, Marshall Islands, Bermuda, Labuan, Mauritius, Cyprus, Switzerland, and Barbados.

Among these, the Cayman Islands had 41 companies, with the number more than doubling from 18 the previous year.

Located in the western Caribbean Sea, the British overseas territory comprises Grand Cayman, Cayman Brac and Little Cayman. The government is known to levy no income, corporate or capital gains taxes.

30235844-01_bigSK Group had eight companies there in 2012, but set up 21 more last year. Hyundai Group set up two companies there last year, and Daelim Group also opened one.

They seem to have turned their eyes to the Cayman Islands after bombshell statement by the International Consortium of Investigative Journalists last year, which claimed to have obtained more than 2.5 million documents showing secret bank accounts in the Virgin Islands.

The famous tax haven hit the spotlight in Korea as well, with 15 paper companies of Korean conglomerates having been registered there as of last year.

According to Chaebul. com, the conglomerates have 15 paper companies in Panama, and four in Bermuda.

It said the authorities must strengthen its scrutiny of the overseas paper companies set up by top conglomerates as they can be used as channels for tax evasion and other irregular practices in the breach of the foreign exchange regulations.

Labuan, the tax haven located in Malaysia, has two paper companies set up by Daelim Group and one by SK Group.

Switzerland also had paper companies set up by Samsung Group and GS Group.

Among these conglomerates, SK is most active, operating 35 companies in tax havens. It had 24 of them set up last year.

Lotte Group followed SK with 13 companies, Hyundai Heavy Industries had five, and Hyundai Group and Daelim had four, each.

Samsung, Hyundai Automotive Group, LG, CJ, and E Land Group also each had three companies.

For more on this story go to: http://www.koreatimes.co.kr/www/news/biz/2014/06/488_158790.html

Related story:

Companies saving billions through offshore tax havens, report says

By Paul J. Nyden From Sunday Cazette-Mail

Major American companies avoid paying about $90 billion in taxes every year by shifting profits to subsidiaries that are based in overseas tax havens, including places like Bermuda and the Cayman Islands, according to a new report.

“These subsidiaries are often shell companies with few, if any, employees, and which engage in little or no real business activity,” states the report, “Offshore Shell Games: 2014: The Use of Offshore Tax Havens by Fortune 500 Companies.”

The Ugland House — a modest, five-story building in the Cayman Islands — is the official legal headquarters for 18,857 different companies, the report says.

“Offshore Shell Games” is released annually by the United States Public Interest Research Group Education Fund, Citizens for Tax Justice and regional groups including the West Virginia Citizen Action Group (CAG).

“Collectively, the companies reported booking nearly $2 trillion offshore for tax purposes, with just 30 companies accounting for 62 percent of the total, or $1.2 trillion,” according to the new study.

The amount of cash U.S. multinationals moved offshore to avoid taxes doubled between 2008 and 2013.

Gary Zuckett, CAG’s executive director in Charleston, said, “Our tax code is broken, and it’s hurting the public. We’ve made it too easy for American multinationals to dodge taxes by setting up shell companies in tax havens. It hurts all West Virginia taxpayers.

“We simply shouldn’t allow companies that use our roads and other infrastructure, and benefit from our education system and large consumer markets, to take a free ride at the expense of the rest of us.

Offshore loopholes used by American corporations, Zuckett said, are costing West Virginia $55 million in state tax revenue every year.

“That money could be used to fill the holes in our state budget so we don’t have to cut education and other state services every legislative session,” Zuckett said.

More than 70 percent of all Fortune 500 companies maintained offshore tax havens in 2013, the new report states. Many are based in Ireland, Luxembourg, the Netherlands and Switzerland.

Just six percent of those companies account for more than 60 percent of the offshore profits.

Those 55 companies, the PIRG report points out, would have to pay $147.5 billion in additional federal taxes if they did not create their offshore havens. That would equal the entire state budgets of California, Virginia and Indiana combined.

Several major companies moved billions into offshore tax havens, the report says:

n Apple shifted $111.3 billion in profits offshore, more than any other company. The computer giant would owe $36.4 billion in U.S. taxes without those tax-free havens.

n American Express reported $9.6 billion in offshore investments that saved the company $3 billion in taxes last year.

n Nike kept $6.7 billion of its profits offshore, saving $2.2 billion in U.S. taxes last year.

n Bank of America has 264 subsidiaries in offshore tax havens, more subsidiaries than any other single corporation. Moving $17 billion in profits offshore, the bank saved $4.3 billion in taxes last year.

n PepsiCo had 137 offshore subsidiaries, which reportedly made $34.1 billion in profits that could have been taxed.

n Pfizer, the world’s largest drug and pharmaceutical manufacturer, operated 128 subsidiaries in tax havens that reported $69 billion in profits last year.

Citigroup, Google and Microsoft also saved billions by moving some of their profits to offshore subsidiaries.

Jeni Burns, owner of Mrs. Groovy’s Kitchen, a catering service in Charleston, said, “Small businesses do their part to make our community better.

“Our taxes help pay for roads, bridges, schools and other public services that my business and my customers depend on. We should close the loopholes that let these multinationals skip out on paying their fair share for the services that helped them make their profits.”

Burns is a co-founder of a new small business group called the West Virginia Sustainable Business Council.

To end tax haven abuse, the new PIRG report recommends, Congress should end incentives for companies to shift profits offshore, close the most egregious offshore legal loopholes, strengthen tax enforcement and increase corporate tax transparency.

“Offshore Shell Games” can be accessed, at no cost, at: http://uspirgedfund.org/reports/usf/offshore-shell-games-2014

For more on this story go to: http://www.wvgazette.com/article/20140608/GZ01/140609381/1419#sthash.GGRv6yDg.dpuf

Related story:

PTT chief lashes back at social media reports [of secret accounts in Cayman Islands]

From The National

PTT chief executive on Monday rebutted social media reports that, among others, accused the company of enjoying the monopoly of Thailand’s energy sector and opening a secret account in the Cayman Islands.

Pailin Chuchottaworn, president and CEO, said at the press conference that there are faults in social media reports in the past few weeks.

He denied the report that his own salary was as high as Bt4.7 million. He said that he was just among 10 PTT executives who earned a combined amount of Bt69 million in 2013.

On the secret account on the Cayman Islands, he said such was impossible given that PTT’s operations are under the scrutiny by the Auditor General’s Office. If that happens, the office must have spotted it, he said.

He also denied the report that PTT has monopolised the energy sector and reaped enormous profits. He noted that PTT’s retail oil business, which controls a 39 per cent market share, generates only 15-16 per cent of the company’s earnings. Meanwhile, retail oil prices in Thailand are based on Singapore prices due to Singapore’s prominence in the regional energy trade.

He also rebutted that Thailand’s oil reserves are not as high as rumoured, citing the Energy Ministry’s finding that Thailand’s reserves will last in 7 years. This forces PTT to ink contracts for supplies from foreign countries, he said.

Meanwhile, sales of LPG to petrochemical firms are not taxed because value-added tax is levied on the value of finished products from their plants. Meanwhile, sales of LPG as fuel are subjected to excise tax and VAT.

Asked about the energy reform pending the National Council for Peace and Order’s consideration, he said personally he preferred the free-market approach. He also insisted that the Oil Fund should be kept, as a government tool to prevent shortages and ease price volatility.

PHOTO: Pailin Chuchottaworn, president and CEO

For more on this story go to: http://www.nationmultimedia.com/business/PTT-chief-produces-strong-rebuttal-to-false-report-30235844.html

 

Print Friendly, PDF & Email
About ieyenews

Speak Your Mind

*