Paradise Papers – new data leak lands many celebrities and large corporations in hot water

New documents bring tax tricks used by politicians and multinationals to light

Following the Panama Papers scandal, once again extensive data sets have come into the open, which reveal how large corporations and the super rich are using numerous tax tricks to channel their money past the taxman. The name of this new case of tax avoidance and fraud: Paradise Papers. The documents reveal the tax-saving deals of numerous celebrities, among them Queen Elizabeth, the former German Chancellor Gerhard Schröder, popstar Bono, Formula 1 World Champion Lewis Hamilton or Jared Kushner, son-in-law of US President Trump.

About 13.4 million highly sensible documents were leaked to Süddeutsche Zeitung. As had been done in the Panama Papers case before, journalists from many countries analysed the documents. 380 journalists from 67 countries participated in the research. The data sets revealed the names of more than 120 politicians from almost 50 countries. The tax strategies used by corporations such as Facebook, Uber, Siemens, Bayer or Nike are referred to. A large part of the data probably comes from the law firm Appleby, which has its headquarters on the Bermudas and specialises in offshore structures. Another part of the data has its origin at Asiacity Trust with the headquarters in Singapore. Moreover 19 more data sets from different tax havens were analysed.

The deals of the US Commerce Minister with Russia

Particularly volatile is data, which shows the close business relations between US Commerce Minister Ross and Vienna-based Sibur International GmbH, which in turn holds a close relationship to the Kremlin. In 2014, Sibur apparently paid several million euros in rent for 2 crude oil tanker vessels to Navigator Holdings, in which Ross has kept investments. Apart from that, according to research carried out by the Austrian Magazine Falter and the ORF, in the same year the shipping company of the US Commerce Minister generated revenue of € 16 million from business deals with Russian natural gas. This is particularly delicate as 2014 was the year when Russia annexed Crimea, and the USA subsequently imposed a number of sanctions against Putin and his cronies.

Avoiding tax payments: Apple hits the headlines once again

Once again in the hot seat is the technology company Apple: In 2016 already, the European Commission demanded that Apple had to repay taxes of € 13 billion in Ireland. Subsequently to the case being hotly discussed also by the US Senate, the technology company turned to the law firm Appleby: the documents, which are now in the hands of the journalists, indicate that Apple made enquiries concerning other offshore tax havens, where they could move their profits to enable them to once again avoiding paying income tax.

Tremendous damage for EU Member States

The damage for EU Member States caused by unpaid taxes is enormous: The multinational corporations transfer to the lowest tax countries within the EU – Luxembourg, Ireland, the Netherlands, Belgium, Malta and Cyprus – € 350 billion year by year causing high tax losses in the other EU countries. According to Süddeutsche Zeitung, international companies each year move a total of € 600 billion to tax havens. Germany alone suffers annual tax losses of € 17 billion; according to the economist Gabriel Zucman this is more than 32 percent of the entire German corporation tax revenue. France losses almost equal 25 % of her corporation tax volume, Italy more than 21 % and Austria about 13 %.
Following the Paradise Papers leaks, there are already considerations to continue the Panama Papers Committee of Inquiry, which was initiated by the European Parliament. Looking at the new documents, it is obvious there will be a great need for further talks in future.