Australian Taxation Office says investigation of data leak has identified 731 individuals and 344 corporate entities so far

This article is more than 2 years old

This article is more than 2 years old





The Paradise Papers have helped to reveal a global industry of tax avoidance packages that are offered to wealthy individuals much like holiday packages, the Australian tax authorities say.



The Paradise Papers have also revealed how offshore tax providers have expanded dramatically since the financial crisis, growing super-sized networks of accountants, lawyers and tax specialists that dwarf similar networks from a decade ago.

Mark Konza, deputy commissioner at the Australian Taxation Office, said: “These [leaks] send a clear message to those people who are involved with these types of service providers: if you’re getting involved in any arrangement that relies on secrecy then you can’t rely on secrecy.

“What we’re seeing [increasingly] is there are ordinary people who are becoming sick of some of the things they see happening.”

Two months after the Paradise Papers were published, he told Guardian Australia that the names of 731 Australian taxpayers and 344 corporate entities had already been identified in the data.

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He said the ATO was still cross-matching the data in the Paradise Papers with the larger Panama Papers, which were released in 2016, but the information extracted so far was proving significant.

“I would expect that as the data is interrogated further and cross-matched with other datasets [those numbers of individuals will increase],” he said.

He said it was too early to say if individuals identified in the Paradise Papers were already known to the ATO. But the information gleaned from the Paradise Papers had revealed the extent to which intermediaries such as banks, law firms, and accountants have commoditised tax avoidance, he said.

“The Panama Papers and the Paradise Papers led us to think about, well, what’s happening with these intermediaries that are encouraging this type of behaviour?” he said.

“When we focused on the intermediaries, that’s when we began to see … the commoditisation of tax [avoidance].

“We were aware that there were companies providing these services, but I think what we’ve learnt is the commoditisation, with the internet, has continued apace.

“We’ve also identified that after the global financial crisis, there was a round of mergers and acquisitions in the offshore provider industry itself, so while there are thousands of these offshore service providers we’ve identified that some large networks have begun to emerge.

“One company we know has offices in 46 jurisdictions around the world, through constant merger and acquisition activity.”

Konza said tax specialist intermediaries that help individuals avoid tax often specialise in particular regions of the world, such as the Caribbean and the Atlantic Ocean, or Asia and the Pacific Ocean. He said some of these intermediaries were brazenly promoting tax avoidance “packages” to individuals exactly like holiday packages.

A simple internet search shows how such packages can be promoted.

Facebook Twitter Pinterest A website offering corporate tax minimisation packages

A typical tax “package” will help an individual set up a company in one jurisdiction, then help that company obtain a bank account in a second jurisdiction and a business address in a third jurisdiction.

“They would say they give you the arrangements, they give you the tools, but what you do with them is up to you. So they try to stay morally ambivalent,” he said.

“Some websites have various case studies on them, showing it’s possible to be done. One of my favourite case studies ends by saying ‘Is it legal? It’s pretty grey’,” he said.

He said the ATO’s investigations sparked by the release of the Panama Papers and the Paradise Papers had an “iconic value” inside Australia’s tax system, because the subsequent tax crackdowns helped to reassure the community that individuals and companies were having to pay their lawful tax.

“In a lot of these leaks you’re seeing people who have just become dissatisfied and thought enough’s enough, and so they’ve either leaked the information themselves or they might be an IT specialist who just grabs the data off the system, or we’ve had leaks from people who were outraged and they saw some firms and they decided to hack the firms from the outside.”

“We get data releases quite regularly. In between the Panama Papers and the Paradise Papers, I think we’ve had about 13 different data releases from around the world.

“We’re trying to get that message out to people: if you’re relying on secrecy you can’t rely on secrecy,” he said.

Konza said another thing to emerge from investigations of the Panama Papers and Paradise Papers was the growing demand for so-called aged companies.

“There’s a real market in companies that have been incorporated for some time, which are then used to make an arrangement appear to be long-standing, or appear to pre-date certain tax changes” he said.

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“So you could get a 20-year old Singaporean corporation, it will cost you twenty or thirty thousand dollars … no reflection on the Singaporeans, it’s just a company that’s been registered, there’d be aged Australian companies as well that you could probably buy.

“The oldest company that we’ve seen for sale is a 1902 Nevada corporation from the US, which was almost US$200,000.

He said these revelations were helping revenue authorities.

“It makes you query basic facts about where has a company been for most of its existence – was it really an operating company or was it a vintage company bought off the shelf?” he said.

“So there’ve been a few things that have come out of the papers already.”