Common Reporting Standards
Sören Seitz, Vice President & Chief Compliance Officer, Manulife Asia, Common Reporting Standards
Steven Yeo, Senior Vice President & General Counsel, Manulife Asia, Common Reporting Standards
The recent spate of news resulting from the leak of over 11 million documents from the Panamanian law firm, Mossack Fonseca, (now commonly known as the Panama Papers or the Panama Leaks) has refocused a spotlight back on money laundering, tax evasion and the murky world of offshore activities. The leak of documents, many of them confidential, is unprecedented in many ways. While various journalists, authorities, companies and interested organisations across the world are trawling through the sheer amount of data to assess the implications, some of the early disclosures have already had significant impact; such as the resignation of the Prime Minister of Iceland and forced defensive actions by a number of other high-profile individuals and companies whose offshore activities have been discovered.
As interesting as these stories are, especially for sections of the press and its readers with interest on personal affairs of its favourite stars and public personas, the key issue should of course remain tax evasion or even unfair or unreasonable tax avoidance by individuals and, in particular, multinational companies. There is a grave danger of distractions arising both from the focus on forcing disclosures from politicians and public personalities, as well as confusion between tax evasion and appropriate tax planning or avoidance.
Whilst disclosure does not generally mean no tax avoidance, there is world of difference between hiding money from tax authorities and declaring that you have money that is beyond their jurisdiction (or 'hidden' from them). One is tax evasion and usually illegal; the other is tax avoidance, which is generally permitted under applicable laws if properly implemented.
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