Langues appliquées - Anglais : Economie, gestion, droit, AES - 4e - 204

law

Instructions For Study
1. Turn to the definitions following the text Shell Companies and Tax Havens. They refer to
the specialist terms printed in bold type in the list of Useful words and concepts.
2. Use an English language dictionary to find the meanings (in context) of the other words in
the list.
3. Do the exercises to test your language skills.

Shell Companies and Tax Havens
News reports based on an unprecedented leak of classified documents have, in very little time,
dramatically exposed a secret world of the global elite, where large sums of money are quietly,
anonymously, and apparently legally hidden and shuffled around with barely any governmental
oversight. The 11.5 million documents, dubbed the Panama Papers, come from Mossack Fonseca, a
Panama-based law firm that handles offshore shell companies. The news organizations with access
to the documents, which are not public, have reported only a small portion of their contents, and
promise more to come. The actions described in the reports are not necessarily illegal, but they do
raise questions about the kinds of legal tax-avoidance services available to the world's wealthy - and
draw attention to Panama and other countries that allow such practices to flourish.
Panama is known as a tax haven, the name given to countries where foreign individuals and
companies can take advantage of a web of financial loopholes and are taxed at very low, or even nonexistent, rates. In tax havens, international businesses operate outside of their owners' jurisdictions
- offshore - and so enjoy tax breaks and other financial benefits of the country in which they are
operating. In Panama, that means less regulation and more privacy. Panama doesn't ask offshore
companies to pay income tax on international transactions, sales tax, and other fees - only an annual
franchise tax of $300 to the government.
Offshore companies can operate anonymously. Their owners' names and personal information are
not filed with any public government registry, and remain secret. Many companies are managed by law
firms, like Mossack Fonseca. They're not required to keep records of any transactions. If the records
exist, companies are not required to disclose them to foreign governments and tax agencies. "When it
comes to money-laundering, we offer full service: rinse, wash, and dry," said Miguel Antonio Bernal, a
Panamanian lawyer and political analyst. "You can go to any law firm in the city, from the smallest to
the biggest, and open up a shell company with no questions asked." Panama also promises privacy to
holders of offshore bank accounts: It's a crime for Panamanian banks to disclose any information about
those clients unless they're ordered to do so by a court, usually in cases that involve serious offenses,
like terrorism or drug trafficking. In any other case, if banks talk, they can be fined up to $100,000.
Panama is one of the oldest tax havens in the Americas. In 1919, Panama, then just a 16-year-old
nation, began registering foreign ships under its flag to help Standard Oil dodge American taxes and
regulations, according to a report by Armando José Garcia Pires, a researcher at Norway's Institute
for Research in Economics and Business Administration. U.S. ships sailing under Panama's flag
could serve alcohol to their passengers during Prohibition. (These days, foreign ship operators can
register online and pay no income taxes.) In 1927, Wall Street bankers helped Panama introduce lax
incorporation laws, which allowed foreign individuals to open tax-free companies with few questions
asked, explains Pires. The boom in offshore business came in the 1970s, when the country passed
strict confidentiality laws.

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