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Pandora Papers Reveal Rich People Avoiding Taxes

newsforkids.net

Oct 6, 2021

Reporters have revealed a massive collection of leaked documents showing how rich and powerful people around the world have been hiding their money and property “offshore” in order to avoid taxes.

Many of the people are well-known world leaders.

The leak, which is being called the “Pandora Papers”, shows complicated webs of companies, set up in different countries, that help hide the owners of money and property. For example, a person might have property in one country, but use a fake company based in another country (“offshore”) to own it. Often, rather than a single company, there might be a chain of these “shell companies” that own the property.

The main reason offshore companies are used is to move money or property from a country with high tax rates to one with low tax rates. Places with low tax rates are often called “tax havens”. Tax havens also make it easy to start a company while keeping the owners secret. The Pandora Papers include the secret records of a large group of well-known people from around the world. The list includes 35 national leaders and over 330 politicians from nearly 100 countries. It also includes billionaires, pop stars, and criminals.

The information was collected by a group of reporters known as the ICIJ (International Consortium of Investigative Journalists). Over 140 news agencies from 117 countries spent months studying the files, which were given to the ICIJ by an unnamed person. Experts believe that at least $11.3 trillion ($11,300,000,000,000) is held offshore, where it can’t be taxed. The ICIJ says that number could be as high as $32 trillion.

But when people avoid paying taxes, that means governments are missing out on money they could otherwise use on public services, like schools, roads, and health care. The International Monetary Fund says that, worldwide, governments lose up to $600 billion a year in taxes that don’t get paid because of tax havens. It’s not actually against the law to use tax havens. Rich people can often find holes in the laws that allow them to legally move their money or property to offshore companies. But criminals also use offshore accounts to hide money they got illegally.

The Pandora Papers are being released at a time when many countries are talking about how they can work together to make sure tax systems are fair, and that people and organizations are paying the taxes they owe.