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Thursday 22 February 2018

Explainer: Everything you need to know about the Paradise Papers

Queen Elizabeth II smiles as she arrives at Tweedbank Station on September 9, 2015 in Tweedbank, Scotland
Queen Elizabeth II smiles as she arrives at Tweedbank Station on September 9, 2015 in Tweedbank, Scotland

Ryan Hooper

When the Panama Papers were released in 2016, they thrust a spotlight on the tax affairs of the rich and powerful.

Some 18 months later, the so-called Paradise Papers have yet again brought the matter under global scrutiny - and feature high profile key players from much closer to home.

What information has been released?

The Paradise Papers is a database comprising around 13.4 million documents detailing the tax affairs of some of the wealthiest people and companies on the planet.

The majority of the data comes from papers leaked by Appleby, a Bermuda-based law firm specialising in offshore accounts.

Nearly 100 media organisations were involved in sifting through the tranche of files, which were obtained by the German newspaper Suddeutsche Zeitung and shared with International Consortium of Investigative Journalists (ICIJ).

Their importance is underlined by the sheer profile of those included within them.

Where has this data come from?

Much of the new trove of files includes bank statements, emails and loan agreements from Appleby, a firm which helps clients set up in overseas jurisdictions with low or zero tax rates.

Responding to the leak on Sunday, Appleby said there is "no evidence" that it has done anything wrong.

Other records came from Asiaciti Trust, a family-run offshore specialist based In Singapore, and from 19 corporate registries maintained by governments in jurisdictions that draw the wealthy seeking privacy.

Who has been named in the documents?

International household names such as Nike and Apple feature prominently in the list, highlighted for their alleged use of aggressive tax avoidance schemes.

The ICIJ reported that Silicon Valley investor and Russian citizen Yuri Milner got $191 million from VTB Bank, and invested that money in Twitter.

The leaked records also show that a financial subsidiary of Russian energy company Gazprom - official partner of the Champions League - funded a shell company that invested in a Milner-affiliated company that held roughly 1 billion dollars in Facebook shares shortly before its 2012 initial public offering.

The papers also question whether Everton football club has broken Premier League rules over ownership.

But perhaps the biggest name to emerge from the list is the head of the British monarchy. According to reports, around £10 million from the Queen's private fund was paid into funds in the Cayman Islands and Bermuda between 2004 and 2005. A small part of the cash was traced to a lender which has previously been criticised for ripping off poor customers.

A spokesman for the estate said: "All of our investments are fully audited and legitimate."

What is the difference between tax avoidance and tax evasion?

Tax avoidance involves companies and people using legal ways and following the rules to reduce their tax bill, which on a small scale can include using a tax-free ISA to save money.

In contrast, tax evasion is an offence and involves illegal ways of paying less tax than required.

The papers claim major global companies have exploited offshore schemes to avoid tax.

Has there been any Irish reaction?


Jim Clarken, CEO of Oxfam Ireland has said that countries are losing billions every year through tax avoidance and he called for more to be done to try and tackle it.

He said in a statement: "The Paradise papers are yet another ugly insight into how the global tax system is being exploited by those who should be paying most.

"They reveal the staggering scale of the tax dodging scams and evasion tricks which are depriving governments of billions in income.

"The revelations in the Paradise Papers also expose our leaders’ feeble attempts to stop tax cheats. Following the Panama Papers expose, we heard tough talk from politicians but this has translated into weak reforms thanks to pressure from big business and the super-rich.

"We must remember that tax dodging impacts on everyone whether they live in richer nations or the developing world. It fuels poverty and inequality. When the super-rich and corporations dodge taxes it is ordinary people, who pay the price.

"Just think how the additional revenue could help improve services in a country like Ireland. The extra taxation could be directed towards schools, hospitals and other social services.

"Some of the billions dodged by corporations and the super-rich in poor countries every year could fund the healthcare services needed to prevent the deaths of millions of mothers, babies and children."

What happens next?

Much like the Panama Papers and to some extent the Expenses Scandal before it, revelations from the Paradise Papers are likely to dominate international news bulletins for days to come.

In addition to the initial cache of data released on Sunday night, the ICIJ has promised further information will be made public throughout the week.

The ICIJ said this will include "stories on strategies used by multinational corporations to shift profits to low-tax jurisdictions," and an expose on "the world of private jets and yachts" owned in offshore tax havens by the planet's richest people.

Press Association

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