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Tax haven USA wants to dry up other tax havens

by A.Widmann, D.Bocking and K.Schoeneberg Tuesday, Sep. 22, 2020 at 5:13 PM

Two US states lure with particularly lax laws for companies. Constructions such as mailbox companies, which help to conceal the true owners of companies, are flourishing. The American government can certainly be accused of double standards in this matter:

Tax haven USA wants to dry up other tax havens

According to an NGO report, the USA attracts a particularly large amount of illegal money. According to Washington, this should remain so. Competition from other tax havens is not tolerated

by Aloysius Widmann

[This article published on 2/18/2020 is translated from the German on the Internet,]

The European Union has a blacklist of tax havens. And the list is getting longer and longer. On Tuesday, for example, the EU finance ministers put Panama and the Seychelles on the index - as well as the Cayman Islands. This is consistent if one takes the new shadow finance index of the Tax Justice Network (TJN) as a benchmark. This was also published on Tuesday and lists the Cayman Islands as the number one tax haven on the planet for the first time. However, just behind the British overseas territory in southern Cuba, there is a country on the shadow financial index that is missing from the European list: the USA. The world's largest economy is in second place, followed by the previous leader, Switzerland.

Not on Europe's black list: the USA.

According to TJN analysts, the fact that the USA in particular attracts illegal financial flows on a large scale is alarming. "Contrary to all promises, it is still possible to park stolen money in the United States," according to the NGO specialized in tax issues. In addition, the USA refuses to participate in the automatic exchange of information by the tax authorities, TJN complains. This is relevant in so far as more than a fifth of the worldwide offshore business runs via the USA.

For the Shadow Financial Index, the TJN experts have closely examined 133 countries and looked into the state of banking secrecy, for example, whether company registers are accessible and whether states cooperate in the fight against tax evasion.

USA measures with two measures

The fact that the US states of Delaware and Nevada are mentioned in the same breath as tax havens such as the Cayman Islands or Guernsey is not new in itself. The two US states lure with particularly lax laws for companies. Constructions such as mailbox companies, which help to conceal the true owners of companies, are flourishing. TJN analysts attribute the tax havens of Nevada and Delaware to tax competition between the states. This is probably one of the reasons why Washington does nothing about tax havens at home.

But that does not mean that the United States approves of tax havens in principle. The American government can certainly be accused of double standards in this matter: While the United States refuses to take action against its own tax havens, it wants to get at other tax havens.

US citizens are to be prevented from getting their money out of the country without going through the tax authorities. At the same time, foreigners should continue to park their money in the states. Tax havens dry up and at the same time remain tax havens - this works in the USA according to the motto "ignorance protects". That is why US law does not require foreign financial institutions to report all income in the USA to the American treasury. This would not only expose untaxed income of US citizens, but also illegal income of foreigners, for example through mailbox companies in Delaware. Once the state has information about foreign tax evaders, the pressure to disclose them is likely to increase.

Rather, US law - to put it simply - provides that banks or companies only have to report information about people living in the USA. But not who is ultimately pocketing the profits of shell companies. The European owner of an American mailbox company is off the hook if it is managed on paper by US lawyers, for example.

Austria not so super

Of course, the TJN experts have also looked at Austria, and they do not give the country a good report card. The greatest need for improvement is in the transparency of property and companies. However, Austria scores well in international cooperation and automatic data exchange. The bottom line is 36th place in an international comparison. (Aloysius Widmann, 18.2.2020)

Shadow financial index: These countries are too lax in their approach to crooked financial transactions

Shadow Financial Index Vanishing Point USA

The USA has cracked Switzerland's banking secrecy. According to a new ranking list for crooked financial transactions, however, they are now the more important address.

by David Böcking

[This article published on 2/18/2020 is translated from the German on the Internet,]

Apartments in Miami Beach, Florida: Even Maduro friends parked money here

"Being second is good at many things," said Lindsey Graham at a hearing in the U.S. Senate Judiciary Committee last June. "But not here."

Graham, a well-known US Republican, spoke of the shadow financial index of the Tax Justice Network (TJN). The ranking evaluates countries according to how intransparent their financial sector is and how much weight it carries for international business. "After Switzerland, we come in second place in the safe havens for money laundering," Graham summarized the results of the last evaluation in 2018. And then promised: "We will find a way to stop being second.

World champion in tax evasion

Shadow financial index 2020


Cayman Islands






Hong Kong










British Virgin Islands


United Arab Emirates

Tax Justice Network

Nothing will come of it at first. In the new shadow finance index, which will be published on Tuesday, the USA also occupies the inglorious second place. They overtook the previously leading Switzerland, which this time ended up in third place. Only the Cayman Islands, which the EU added to its black list of tax havens on Tuesday, fared worse than the USA.

The result shows: Those who want to hide assets from the tax authorities or prosecutors do not necessarily have to rely on classic tax havens like the Cayman Islands. Dirty money can also be moved to the USA with the help of anonymous company structures.

Graham named some profiteers in the Senate six months ago: Familiars of Venezuela's authoritarian president Nicolas Maduro bought real estate, companies and horses in Florida. Malaysia's ex-premier Najib Razak, who is said to have robbed his own state of a three-digit million sum, invested it in luxury real estate in New York and Los Angeles, among other places. And a troll factory, with whose help Russia tried to influence the US elections, was also financed with the help of American straw companies.

While the EU countries reduced their supply of shadow finance by an average of eight percent since the last index, Great Britain expanded its supply by 26 percent.

Internationally, U.S. authorities have done much to combat tax evasion and money laundering in recent times. It was above all their pressure that helped crack the legendary Swiss banking secrecy. At the same time, however, various US states have positioned themselves as tax havens thanks to lax laws - New Hampshire, for example. The fact that anonymous private foundations are now allowed to be set up there was a decisive factor in the deterioration of the US rating in the new index.

How hypocritical are the industrialized countries?

Other industrialized countries also rank high on the shadow financial index. Hong Kong, Singapore, Luxembourg, Japan and the Netherlands rank fourth to eighth. According to the TJN, no less than 49 percent of the world's usable shadow financial capacity is provided directly or indirectly by members of the industrialized nations organization OECD.

Black list: EU does not dare to call USA a tax haven By Peter Müller

This is also a delicate finding because negotiations on global tax reform are currently underway under OECD leadership. Conflicts are emerging among the developing and emerging countries, which are also involved in the negotiations, about the future distribution of tax revenues. They are also likely to play a role at the meeting of the G20 finance ministers and central bank heads in Saudi Arabia this weekend.

The Tax Justice Network now attests the OECD countries "hypocrisy in curbing the shadow finance": While the industrialized countries themselves would only score an average of 54 out of 100 possible points in terms of secrecy, areas dependent on them would score an average of 73 points.

This criticism is directed in particular at British overseas territories, which include the British Virgin Islands (9th place), Guernsey (11th place), Jersey (16th place) and the Bahamas (22nd place) in addition to the first-placed Cayman Islands. While the EU countries have reduced their supply of shadow finance by an average of eight percent since the last index, Great Britain has increased its supply by 26 percent.

Those who want to hide assets from the tax authorities are not necessarily dependent on classic tax havens like the Cayman Islands.

After the brexite, this development could become even worse - if the idea of a financially deregulated "Singapore on the Thames" becomes accepted. "Responsibility is converging in London," says Index author Markus Meinzer. The financial sector there could use the overseas territories even more aggressively in the future to park money away from the public. This makes it all the more important that the British financial sector does not gain unlimited further access to the EU market, as recently demanded by Prime Minister Boris Johnson. The fact that the tone towards Great Britain could change was now also shown by the inclusion of the Cayman Islands in the EU's black list.

Germany is making progress - on paper

The German financial system scores comparatively well in the new index: instead of seventh, Germany only finishes in 14th place this time. This is due to the fact that the German government has made so-called transparency registers of the beneficial owners of companies public - and thus exceeded OECD requirements. In addition, cross-border tax avoidance models must now be reported by the originators.

"This is progress, but only on paper for the time being," says Christoph Trautvetter of the Tax Justice Network. So far, there are hardly any usable entries in the transparency register. In addition, a similar register is missing for the real estate sector, which is why many citizens do not even know who is driving up their rents. How much the latest changes in the law have actually achieved will become clear in the course of this year. Then the so-called Financial Action Task Force (FATF) will review the German measures against money laundering. At the last review in 2010, the FATF had clearly criticized Germany.

Also interesting

Real Estate Transactions: Real Estate Transfer Tax? Not for Speculators By Andreas Wassermann

Real estate transfer tax? Not for speculators

Also in the USA the consciousness for the own role in crooked financial transactions seems to grow - as the statements of the Republican Graham show. In the meantime, representatives of both US parties have recognized the problem and initiated corresponding bills, says Clark Gascoigne from the Financial Accountability and Corporate Transparency Coalition, an alliance of more than 100 non-governmental organizations. "After more than a decade of debate, 2020 should be the year when the US finally launches major transparency reforms.

Tax Havens

Shadow financial centers - Criterion II

[This article is translated from the German on the Internet,]

Tax avoidance leads to massive revenue losses for the state and therefore damages the common good in favor of the wealthiest individuals and companies.

We have evaluated the lists of shareholdings of Deutsche Bank, Commerzbank, Postbank, Deka Bank (as the central asset management of the savings banks), Hypovereinsbank and DZ Bank (as the central bank of Volks- and Raiffeisen-banks) and listed which bank has how many subsidiaries and special purpose vehicles, as well as significant shareholdings in locations classified as tax havens.

Our first overview of banking activities in shadow financial centers in 2009 already showed a ruthless picture. But the new overview for the 2010 financial year shows that the situation has by no means improved. On the contrary: the comparison between 2009 and 2010 makes it clear that the banks have learned nothing from the crisis.

Business in the dark

The banks help above all their richest customers to withdraw billions from the tax office - this money is missing from cities and municipalities, schools, social services, public transport, etc.

The German treasury loses around 100 billion euros in taxes annually through hidden wealth alone, which was booked in places trivially called "tax havens", estimated the former Federal Minister of Finance Peer Steinbrück. The tax union is a little more cautious in its calculations of the 30 billion that could be "recovered" if this type of tax evasion were to be effectively combated.

But the "tax havens" are not only places where money is smuggled past the tax authorities. These shadow financial centers are even more expensive for society, because a number of security regulations for finance companies and banks are either not applicable or not applied. Particularly daring financial speculations and particularly opaque funds have their address in tax havens.

However, it would be wrong to assume that these are the "grubby children" of the financial sector. On the contrary: Germany's best-known banks in particular are regularly to be found there, be it on the British Channel Islands, in Liechtenstein and Luxembourg or on the distant Cayman Islands. Dictators and autocrats from so-called developing and emerging countries are particularly keen to take advantage of the "discreet" service of tax havens. They exploit their countries, become billionaires - and usually remain so even after they are deposed, thanks to the consistent help of cover-ups in the shadow financial centers.

A few years ago, the member states of the OECD (Organization for Economic Cooperation and Development) decided to take action against tax havens. They introduced a "black list" on which countries should be entered that refuse to accept a minimum exchange of data with tax authorities in other countries. But: Shortly after the lists were published, the "black list" was virginally pure again: The criteria are so weakly written that according to this view there are probably no tax havens after all...

In response to our letter to the banks, the Postbank replied that it did not conduct any activities in shadow financial centers. However, in doing so, it is referring to the OECD list.

Some special features

In Georgetown on the notorious Cayman Islands, where almost 10,000 hedge funds have their address, Deutsche Bank maintains more branches and special purpose vehicles than at the Group headquarters in Frankfurt.

The U.S. state of Delaware (especially the city of Wilmington) is currently considered the largest tax haven. Here, Deutsche Bank maintains one fifth of its total activities. Taxes are extremely low and there are no disclosure requirements for companies that can be founded with only one managing director and without share capital. These conditions lead to absurd results, for example that in the office building 1209 North Orange Street in Wilmington more than 200,000 companies "sit" or have their mailboxes.

Although the German direct bank ING DiBa does not itself have any holdings or (special purpose) companies in shadow financial centers, ING Groep (Netherlands), as its parent company, has companies in Hong Kong, Bermuda and Curaçao (Netherlands Antilles), among others.

In Germany, the municipality of Grünwald currently fulfils a number of criteria according to which it can be considered a tax haven. Grünwald is tax dumping to touch: The small town of around 11,000 inhabitants south of Munich has an above-average number of millionaires. 790 companies are listed in the local yellow pages, including 24 investment companies alone. Although Grünwald is less than a tenth of the size of Regensburg, it collects just as much trade tax - but at a completely dumping level. Hypovereinsbank is (co-)owner of 16 companies in Grünwald, Commerzbank even of 88.

Latest developments

In 2010, Deutsche Bank further expanded its commitment to tax havens, adding 34 new activities in Luxembourg alone. Overall, half of Deutsche Bank's special purpose entities, affiliated or associated companies are located in tax havens. In the 4 major tax havens Cayman Islands, Delaware, Luxembourg and Liechtenstein alone, Deutsche Bank owns 737 companies, which corresponds to its activities in Germany (746).

DZ Bank, the central institution of the Volks- und Raiffeisenbanken, has more than doubled its involvement in tax havens and in 2010 added 125 activities in tax havens, more than 50 of them in the Marshall Islands alone, where it has a stake in a whole fleet of ships, all of which are registered as individual companies.

In the course of a general reduction of special purpose entities, affiliated and associated companies, Commerzbank has reduced the number of investments in tax havens. This does not, however, indicate a change in business policy, as according to the 2010 annual report, it gained shareholdings in 33 companies in the German tax haven of Grünwald near Munich.

Tax havens cause environmental damage: taxes gone, fish gone, forest gone

by Kai Schoeneberg

[This article published on 8/14/2018 is translated from the German on the Internet,!5528344/.]

Rich people and corporations not only save money here without end: According to a study, tax havens also damage the environment. And Germany is also involved.

Skyline of Panama

This is where the coal goes - and causes a particularly large number of environmental sins: Skyline of Panama Photo: dpa

STOCKHOLM/BERLIN taz/dpa | Tax havens abroad not only enable rich people to do business worth billions - according to a new study, they also make it easier to exploit nature. According to the study, 70 percent of all known ships involved in illegal and unregulated fishing operate under the flag of a tax haven. The deforestation of the Brazilian rainforest also seems to be favored by money from tax havens, Swedish researchers write in the magazine Nature Ecology and Evolution.

A direct proof of causality between tax havens and environmental destruction is difficult to prove because of financial secrecy, admits the team from the Resilience Centre at Stockholm University (SRC) and the Global Economic Dynamics and the Biosphere of the Swedish Academy of Sciences. It cannot be shown with certainty how the financial flows affect local economic activities - and thus the environment.

Nevertheless, the researchers do not doubt their findings: "Our analysis shows that the use of tax havens is not only a socio-political and economic problem, but also an environmental problem," explains lead author Victor Galaz of Stockholm University in a communication from his university. The existence of tax havens is detrimental to the sustainable management of oceans and the Amazon rainforest, he said.

Tax havens also interesting for money laundering

Tax havens are states or territories that levy particularly low or no taxes on income and wealth, while promising high discretion. This not only makes them attractive as corporate headquarters, but also for money laundering and other dishonest business.

According to the scientists, tax havens such as Belize and Panama are mainly used to disguise illegal or unregulated fishing. In many of these countries, ships that break international laws would not be reported.

In another study, the researchers revealed that the nine largest companies in the Brazilian soy and meat industry received an average of more than two-thirds of their foreign direct investment through tax havens between 2000 and 2011. Using data from the Brazilian central bank, among others, the researchers found that 18.4 billion US dollars flowed to the companies from there - especially from the Cayman Islands and the Bahamas. The recipient companies were largely responsible for the deforestation of the rainforest, which stabilizes the earth's climate system.

The companies proceeded differently: They reallocated profits via subsidiaries in countries with low tax rates or financed activities in countries with high taxes by loans from the subsidiary in the tax haven.

German development funds also end up in tax havens

After the revelations of the so-called Panama Papers about controversial deals with shell companies, the larger economic nations have indeed increased their efforts to drain tax havens worldwide and to curb tax trickery by international corporations.

However, development funds from the German government also end up in these tax havens - and have thus indirectly promoted the destruction of the environment for years. This is the result of an inquiry by the Left Party parliamentary group to the German government, which the Tagesspiegel reports on. According to the report, about one billion euros of the Deutsche Investitions- und Entwicklungs GmbH (DEG), a subsidiary of the federal development bank KfW, will initially flow into funds in tax havens. Nearly a third of this is allotted to Mauritius and the Cayman Islands.

Since the end of 2008, the share of development funds that have flowed through so-called offshore financial centers has increased eightfold, the report says. Last year alone, DEG invested more than 60 million euros in new funds in tax havens - half of it in eight funds based on the Cayman Islands.

One example is DEG's participation in Paraguay Agricultural Corporation S.A. (Payco), which is based in the tax haven of Luxembourg. "Not much is known about the developmental added value of Payco, whose production consists of 85 percent soya," says another question from the Left parliamentary group in Feburary this year.

German government defends DEG's approach

"Development cooperation thus becomes an instrument for promoting shadow financial centers," says Fabio De Masi, deputy faction leader of the left. Gerhard Schick, financial expert of the Greens, says: "In shadow financial centers, which stand for worldwide tax evasion and avoidance in the billions, a state bank should not get involved".

The Federal Government, on the other hand, defends the approach of DEG. The offshore financial centers were only an intermediate stage of the financing process, according to the Green Party: "The investments made by DEG always go entirely to a DEG partner country, regardless of where the fund is based. This means that DEG invests in the target countries via offshore financial centers", was the answer to the small inquiry.

The aim was to mobilize private investors by investing in the funds. This is why DEG is joining funds that finance projects in developing countries as a "signal investor" - in the hope that other donors will follow suit. This was the only way to ensure legal certainty and avoid double taxation for some private investors.

These are the top tax havens in the world

October 09, 2019

[This article published on 10/9/2019 is translated from the German on the Internet,]

Tax havens are no longer just paradisiacal Caribbean islands as you know them from novels by John Grisham. Sometimes they are even right next door and cause political displeasure and strife. ZASTER knows the most popular loopholes of the rich.

Tax evasion is no trivial offense

The act of tax evasion was long associated with a certain gentlemanly attitude. Celebrities who evaded taxes were glittering bad boys who withheld their money from a state that didn't need it too much anyway. In the meantime, public perception is ticking quite differently here. Tax evasion? Is highly antisocial, immoral and unfair. But the bad guys are not only those who prefer to park their profits somewhere else to reduce their tax burden. Even those who make this large-scale fraud possible are increasingly coming under the scrutiny of investigators and society alike - with initial consequences.

The agreed automatic exchange of information between tax havens and the OECD countries applied for the first time in 2017, and a small inquiry by the party Die Linke now revealed the fabulous figure of 39 billion euros that German citizens have parked in offshore bank accounts for 2017.

How does tax evasion work?

In order to reduce one's own tax burden, incomplete or incorrect information on taxable income is deliberately given to the tax office. Attempting tax evasion is just as punishable as the actual execution. In December 2017, the EU published a list of 17 countries that are not doing enough to combat tax evasion. This so-called black list was a reaction to the Panama Papers. It is constantly updated, which is also urgently needed, as our ranking will show. Because the Caribbean islands like Panama and Palau, which were long considered tax havens, have received competition - from the EU.

The basis is the Financial Secrecy Index, a regularly published ranking that uses 15 key figures to determine where money can best be hidden. The index is therefore more complex than the EU blacklist - but therefore also more accurate!



Surprise! Yes, Germany is also represented in this ranking and occupies an inglorious seventh place. The reason? The German tax law is small-scale and, at first glance, outwardly exemplary - in terms of employee income tax. In fact, however, it is precisely large companies in this country that manage to save money through many loopholes within the corporate tax system. This attracts above all foreign companies. A fair face on the outside, a pfui on the inside, Germany?



With just 500,000 inhabitants, Luxembourg City is home to over 140 banks from around 27 countries. Special agreements with transnational companies and the location between Germany, Belgium and France make Luxembourg a very attractive tax haven in the EU. Since 2015, Luxembourg has also been providing information on tax matters of OECD countries. Nevertheless, it is still enough for a respectable 6th place.



Since its independence in 1965, the small island state has developed into one of the richest countries in the world and is now one of the most important financial centers in Asia. Banking secrecy is described as "watertight", which is of course music to the ears of wealthy foreigners and large corporations.


Hong Kong

The political situation in the special administrative zone of China is hotting up and Hong Kong is making a name for itself through the continuing protests in the international press. Hong Kong is highly interesting for companies because of the very strict bank secrecy and the proximity to the Chinese market - protests or not.


Cayman Islands

All right, you will also find an evergreen in this list. The Cayman Islands are old friends when it comes to tax havens. What makes the small island state so attractive for foreign companies? How about the complete absence of income, corporate, capital gains and inheritance tax? The palm trees and crystal clear water will do the rest.



Make America Great Again? When it comes to making the "little ones" pay and letting the big ones get away scot-free again and again, America is even more industrious than Germany. Overseas, too, individuals can hardly get past income tax, while large corporations park their billions abroad to keep their cost books nice and tidy and save taxes.



Banking secrecy was long considered inviolable in Switzerland. The numbered accounts of the Swiss Confederation are world-famous and were sometimes romanticized in feature films. In fact, a lot has happened here: Since 2014, Switzerland has joined the automatic exchange of information in tax matters of OECD countries. Nevertheless, countless crude transfers and transactions still take place in Switzerland, and since the Alpine state is not part of the EU, one does not feel particularly compelled to make concessions.

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