By Ben Sewell -
Snapshot
- Incorporating through an offshore haven is straightforward and relatively inexpensive.
- There is a strong incentive for Australian residents to generate income in offshore havens and evade Australian income tax through secrecy. This is likely to be an increasingly risky venture because of the tax information sharing agreements between Australia and offshore havens.
- International Business Companies can be sued under Australian corporate law if these companies trade in Australia. This is important to know when acting for a creditor of an International Business Company because Australian corporate law provides significantly more protections for creditors than the corporate law of offshore havens
Offshore havens have recently captured our imagination through the Panama Papers leak. A trove of client data (2.6 terabytes of data containing 11.5 million records) from a Panamanian law firm was leaked to the International Consortium of Investigative Journalists (‘ICIJ’). The ICIJ’s website provides a search engine with offshore haven company ownership information from the leaked documents as well as educational videos and articles (offshoreleaks.icij.org). The journalists are still analysing the Mossack Fonseca materials themselves and writing articles about the use of offshore havens by the wealthy and powerful around the world.
The ICIJ reports the two most popular offshore havens are the British Virgin Islands and Panama. Those jurisdictions prefer the title ‘offshore financial centre’ to offshore haven or tax haven. The British Virgin Islands (Norman Island) was reputedly the inspiration behind Robert Louis Stevenson’s pirate novel ‘Treasure Island’. Today, according to the ICIJ, there is still treasure hidden in the same islands, metaphorically at least.
