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Gimme Shelter (From Taxes)

Gimme Shelter (From Taxes)

Illustrations by Neal Fox

Once confined to a few tropical islands riddled with yachts and flashy drug dealers, the tax haven market has morphed into a sprawling tableau of low-tax zones that cater to wealthy individuals and multinationals. The glut is the result of persistent corruption in emerging markets such as Russia and Brazil, the financial crisis, and rising tax rates, especially in Europe (just ask Gérard Depardieu).

There are now 70-plus “business-friendly jurisdictions,” as tax lawyers say, and they’re sheltering $21 trillion to $32 trillion, up from $11.5 trillion in 2005, according to the Tax Justice Network, a group of tax haven opponents that sees no difference between tax avoidance and tax evasion.

Once upon a time, most business-friendly jurisdictions were more or less the same. Today each has its own character (and, in some cases, PowerPoint presentation). Yet to tax haven opponents, all this differentiation papers over an unavoidable fact. “The commonality is the willingness to provide secrecy services,” says Raymond Baker, director of Global Financial Integrity, a Washington advocacy group. “The Cayman Islands is particularly egregious. Singapore and Hong Kong are a growing concern. Dubai is far too lax on the handling of bulk cash.” Switzerland hoped to be the main recipient of illicit money around the world, “but the U.S. decided far too much of that money was going there, so banks put on a real effort to attract flight capital, particularly out of Latin America—and did so successfully,” says Baker.

That’s not how the tax havens, or the people parking their money there, see it. For the uninitiated, an abbreviated catalogue of haven types.

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