Why does the Bermuda group matter?

A Bermuda partnership may have helped two bank accounts fall outside the reach of U.S. tax authorities. Several countries are looking into the allegedly illegal offshore tax practices of Apple Inc., Starbucks Corp. and…

Why does the Bermuda group matter?

A Bermuda partnership may have helped two bank accounts fall outside the reach of U.S. tax authorities.

Several countries are looking into the allegedly illegal offshore tax practices of Apple Inc., Starbucks Corp. and other U.S. companies. But when is a company on the edge of breaking the law so bad that the authorities can rummage through employees’ bank statements to unravel their finances? These days, the government doesn’t care so much about legal troubles.

That’s because the past few years have seen a sea change in the way these secretive offshore tax havens operate. Thousands of smaller ones have gone out of business or been forced to settle for smaller sums and new tax negotiations are under way. Meanwhile, companies, particularly U.S. firms, face much stiffer taxes, sometimes tens of thousands of dollars a year, from governments reluctant to cut them any slack.

As a result, the other countries involved in an ongoing investigation of Australia’s biggest bank, Westpac Banking Corp., are taking a more circumspect approach to their offshore tax dealings.

Some countries in the Pacific Alliance trade group – Brazil, Chile, Mexico and Peru – were so concerned about the scandal that they were looking into that country’s financial sector to look at possible links between clients and the Westpac inquiry.

But at the moment, none of them appear to be ready to lay down an information-gathering charge at the offshore companies under examination.

No one seems to know how many cases like the one with the Bermuda group have come to light. They certainly aren’t under the same spotlight that they were for example when the Panama Papers scandal broke, or when Apple was investigated by the Australian tax authorities, or that was swirling around companies that remain under investigation today.

As much as the Panama Papers affair, a huge leak by thousands of anonymous offshore files from law firm Mossack Fonseca show how much of the business is local.

Leave a Comment