Another massive leak of information from a tax haven law firm – dubbed the Paradise Papers – has shone a spotlight on the questionable ways in which wealthy individuals and big companies structure their finances.
But how do tax havens actually work?
Can they ever be legitimately used?
Exactly how big is the problem?
And what can governments actually do about it?
How do tax havens actually work?
How big is the problem?
Corporate tax avoidance is significant.
At the end of 2016 the giant US technology companies alone were estimated by Moody’s Investors Service to have $1.84 trillion (£1.4 trillion) of cash held offshore.
This is essentially profits that firms such as Apple – Microsoft and Google registered outside the US and most of which is piled up in tax havens.
But personal tax avoidance is bigger.
The calculations of the economist Gabriel Zucman – analysing discrepancies in countries’ national accounts – suggest that around $7.6 trillion or 8 per cent of global wealth is held offshore.
That’s up 25 per cent over the past five years.
Not all of that money will be held off-shore in order to dodge tax in a morally questionable way.
But it’s fair to assume that a large proportion of it is.
The Tax Justice Network campaign group estimates that corporate tax avoidance costs governments $500bn a year – while personal tax avoidance costs $200bn a year.