Aircastle Ltd. is not a household name, but if you’ve flown on South African Airways, KLM, or any of more than 80 other airlines, you’ve probably traveled on an airplane the Connecticut-based company owns and manages.

The company´s business model is based on buying, selling, and leasing aircraft worldwide. Its corporate structure minimizes the payment of taxes by using a complex arrangement of subsidiaries, all managed from Connecticut, Ireland, or Singapore.

These arrangements, recently highlighted in the #MauritiusLeaks investigation by the International Consortium of Investigative Journalists (ICIJ), are legal. But they have allowed the company to pay minimal taxes, including no corporate taxes in the United States on income from their aircraft leases.

Aircastle, of course, isn’t alone among large American companies in lowering their taxes through creative accounting. Well-known giants such as Amazon and Apple do so as well.

But the recent revelations on Aircastle’s use of Mauritius as a tax haven provide a helpful window into how such tax dodges can use offshore companies set up primarily for that purpose. Getting to zero with tax avoidance became even easier with the new Republican tax cuts in 2017, but Aircastle was already well on the way to that objective.

For example, when Aircastle decided to do business in South Africa in 2010, as the ICIJ and Quartz Africa revealed in July 2019, it turned to a Bermuda-based law firm to help it set up six subsidiaries in Mauritius: Thunderbird 1 Leasing Ltd. along with five other companies named Thunderbird 2 through 6. As was Aircastle´s common practice, each company was to own a specific aircraft. South African Airways made their lease payments to the subsidiaries in Mauritius, each of which was owned in turn by an Aircastle subsidiary in Bermuda or Delaware.

Since South Africa and Mauritius have a tax treaty allowing this, Aircastle paid Mauritius at the low Mauritius rates on the income from the leases ($772,735 a month for the first A300-200 leased by South African Airways from Thunderbird 1 beginning in 2011). From 2011 through 2014, according to documents leaked to ICIJ, Thunderbird 1 paid a total of $382,600 in Mauritius taxes, a 1.59 percent tax rate on $24 million in operating profits.

Aircastle paid no taxes on these profits either in South Africa or in the United States.

According to ICIJ, “Had Aircastle’s Thunderbird 1 company alone reported the profits it made in Mauritius over four years in the U.S., it could have paid more than $5 million. Those taxes would just about cover the state of Connecticut’s current budget for domestic violence shelters.”

Including other Thunderbird companies as well, Quartz calculated, Aircastle paid $1.5 million in Mauritius taxes on profits of $53 million, at an effective rate of 2.87 percent — thus avoiding $14.8 million in taxes it would have owed if taxes had been paid to South Africa. This is equivalent to more than half the annual social housing budget of Johannesburg.

Aircastle did not respond to queries from ICIJ or Quartz, and data for a more comprehensive analysis of its tax strategy are therefore not available. However, since the company is registered on the New York Stock Exchange and also traded on NASDAQ, its reports to the Securities and Exchange Commission (SEC) are public. Its annual report to investors for 2018, for example, incorporates the 10-K report to the SEC.

There we learn that Aircastle Ltd is actually incorporated in Bermuda and thus pays no U.S. corporate income tax, except on the management services supplied by its U.S. subsidiary to the aircraft-owning companies. Bermuda has no corporate income tax. Thus the company notes in its 10-K report, under the heading “risks related to taxation”:

“If Aircastle were treated as engaged in a trade or business in the United States, it would be subject to U.S. federal income taxation on a net income basis, which would adversely affect our business and result in decreased cash available for distribution to our shareholders.”

Given the lack of transparency in corporate reporting, it is hard to tell how Aircastle’s strategies compare to those used by other companies. The Institute on Taxation and Economic Policy (ITEP) reported in April, based on 10-Ks submitted to the SEC, that 60 of the Fortune 500 had zero or negative federal income tax payments in 2018. But more detailed analysis or estimates of tax revenue lost, in the United States and other countries, require much more data than almost all such reports provide.

The fundamental step needed to make accountability feasible is public country-by-country reporting, whereby corporations would be required to provide for investors and the public a breakdown by country of revenues, profits, employees, and taxes paid for every country in which they do business. Governments, investors, and even some businesses are increasingly accepting the need for such reports.

According to an April 2019 report from the U.S.-based Financial Accountability and Corporate Transparency (FACT) Coalition, however, the trend is in the right direction. “The evidence suggests we are quickly reaching a turning point,” said Christian Freymeyer, researcher and author of the report. “Investors see the value, policymakers see the benefits, and businesses see the inevitability of greater transparency. It’s only a matter of time before tax transparency is accepted and expected of financial disclosure.”

Freymeyer´s analysis may well err on the side of optimism, given the continued opposition from those with vested interests in tax avoidance. But it is certainly true that the argument is now finding new supporters far beyond the circle of tax justice activists who have been the leaders in demanding these reforms.