There’s been a big reveal of the details of a lot of very (very) rich people, paying a lot less tax than they’re technically supposed to – in this country at least.
It’s the second biggest data leak ever (second only to the Panama Papers which – you guessed it – revealed the details of a lot of very rich people paying a lot less tax than they’re supposed to).
The Paradise Papers are leaked files from organizations which help people put their money in companies that are registered ‘offshore’ so they can pay less tax – a lot of them are actually based on 'paradise' islands, like Bermuda.
So why aren't people being rounded up and arrested? It’s complicated, because although it might seem pretty damn unfair to you and me, it’s also legal – these people aren’t evading tax they already owe, they’re avoiding owing it in the first place, by squirrelling it away on paradise islands. Tax evasion = illegal; Tax avoidance = legal.
Different islands (or fancy name: jurisdictions) have different tax laws. Jurisdictions like the Isle of Man and Jersey are pretty heavily caught up in the allegations. They’re known to be tax havens, which basically mean they charge companies a lot less money in tax to encourage them to be there.
The leak is made up of 1.4 trillion terabytes of data, obtained by journalists from a German newspaper Süddeutsche Zeitung. Most of that comes from a law firm called Appleby. Appleby has offices and clients all over the world, and it specializes in helping people set up companies offshore. That means pretty much wherever you live in the world, its likely Appleby would have helped an individual or a company get round paying tax in your country, and paying it in one of these low tax jurisdictions instead.
From Lewis Hamilton, to Apple, to the Queen-of-bloody-England, journalists have spent a year dishing up the dirt on the finance arrangements of some of the world’s richest people and companies.
But it goes beyond them. There’s money held offshore in pension funds that technically could belong to you – or your parents – and you wouldn’t have a clue. And the problem there is that though it might be legal, it’s pretty controversial. The tax that Appleby’s clients avoid paying is tax that would raise money for schools, hospitals, houses.
It’s a tough pill to swallow when all we ever hear is how skint we are.
For the next couple of weeks we’re looking into the stories – who makes the laws, whose affected by them, and why the amount of tax people pay is such a big deal for so many of us.