Investment opportunities only exist if it can produce returns on investment (ROI), after paying its legitimate obligations. It must offer capital gains—growing the investment value and dividends payouts—paying for the use of the investment funds, generating a competitive yield.
Such investment opportunities create employment along with the attendant salaries and wages along with its associated taxation, delivering on individual management contracts and collective worker union agreements. They also spawn other opportunities and donate to society. These investment opportunities call on individuals and corporations, who, after many years of work, have retained excess savings or wealth, to participate in building operations, promising safer and greater ROI.
With limited access to the aforementioned investors, countries and other tax collecting jurisdictions compete, as tax havens, using various tax regimes inclusive of zero per cent along with standard fiscal and monetary policies, for direct foreign investment to fund their development programmes.
Inviting foreign corporations, with expertise and experience in the extractive or agribusiness sector, to bid to explore and develop geographic areas, is common place. The same is offered to foreign individuals migrating with their pension or savings wishing to buy real estate or open a small operation.
Both the corporation and individual can legally, following local lawyers’ advice, open and operate bank accounts to facilitate their activities, with or without declaring the source of funds or hiding the true ownership of the funds. This is what can negatively label a jurisdiction as not in compliance with international financial regulation.
The term “secret bank account” is a misnomer since all bank accounts, foreign or local, unless confronted with a local court order, all banking transactions are secret. In jurisdictions where tax evasion is taking place, the root of the problem is income that someone is not entitled to; bribery of elected or selected public official; undeclared earnings from illegal activities; money laundering; post politics profits etc, all requiring hiding from local authorities.
Financial transparency seeks to trace the process of criminal activities and its beneficiaries across borders as evidence in a prosecution. Without suspecting a crime, the only thing to guard against is political perception.
No law firm or bank employee should target its account holders based on the balances held, or sell information to a third party, for example, investigative journalists, vehicle and insurance salespersons, or charities seeking contributors/donors. There are legitimate security reasons for using anonymous bids at auctions.
To avoid or reduce any income taxation expenditure, there are tax credits designed in all jurisdictions and made legal to fund activities and charities in communities, engaged in social and development works.
Put simply, Government policies will have greater results on tax revenue collection by raising taxes on goods/services; import duties, consumption, sale and Value Added Taxes with no exempted or zero-per cent rated items, which is individually controlled and more efficient at collection than profit based/corporate taxes, at the same time, expanding social services, such as health and food cards, to support and mitigate negative impacts.
Such Government policies maybe better served by strengthening its independent regulators: Integrity Commission, Public Prosecution, Security Exchange Commission, Auditor General, Budget Office, to secure public finances and reduce corruption. These Government policies, as a consequence, will have greater results by lowering profit-based taxes to attract and encourage more foreign or local investment and jobs.
Terrance A Jennings