Tax Haven - Extent

Extent

While incomplete, and with the limitations discussed below, the available statistics nonetheless indicate that offshore banking is a very sizeable activity. In 2007 the OECD estimated that capital held offshore amounted to between US$5 trillion and US$7 trillion, making up approximately 6–8% of total global investments under management. A recent report (2012) by Tax Justice Network (an anti-tax haven pressure group) places the estimate considerably higher: between US$21 trillion and US$32 trillion (between 24-32% of total global investments). A report by the IMF in 2000 based upon interbank settlement figures estimated the crossborder cash held on-balance sheet at US$4.6 billion, although this included major U.S. and European financial centres.

A Wall Street Journal study of 60 large US companies found that they deposited $166 billion in offshore accounts in 2012, sheltering over 40% of their profits from U.S. taxes.

A 2012 report from the Tax Justice Network estimated that between USD $21 trillion and $32 trillion is sheltered from taxes in unreported tax havens worldwide. If such wealth earns 3% annually and such capital gains were taxed at 30%, it would generate between $190 billion and $280 billion in tax revenues, more than any other tax shelters. If such hidden offshore assets are considered, many countries with governments nominally in debt are shown to be net creditor nations. However, the tax policy director of the Chartered Institute of Taxation expressed skepticism over the accuracy of the figures. If true, those sums would amount to approximately 5 to 8 times the total amount of currency presently in circulation in the world. Daniel J. Mitchell of the Cato Institute says that the report also assumes, when considering notional lost tax revenue, that 100% money deposited offshore is evading payment of tax.

The International Monetary Fund produced calculations based on Bank for International Settlements data suggest that for selected offshore financial centres, on-balance sheet cross-border assets held in offshore financial centres reached a level of US$4.6 trillion at end-June 1999 (about 50 percent of total cross-border assets). Of that US$4.6 trillion, US$0.9 trillion was held in the Caribbean, US$1 trillion in Asia, and most of the remaining US$2.7 trillion accounted for by the major international financial centers (IFCs), namely London, the U.S. IBFs, and the Japanese offshore market.

A 2006 academic paper indicated that: "in 1999, 59% of U.S. firms with significant foreign operations had affiliates in tax haven countries", although they did not define "significant" for this purpose.

A January 2009 U.S. Government Accountability Office (GAO) report said that the GAO had determined that 83 of the 100 largest U.S. publicly traded corporations and 63 of the 100 largest contractors for the U.S. federal government were maintaining subsidiaries in countries generally considered havens for avoiding taxes. The GAO did not review the companies' transactions to independently verify that the subsidiaries helped the companies reduce their tax burden, but said only that historically the purpose of such subsidiaries is to cut tax costs.

In 2011, the Caribbean Banking Centers which include Bahamas, Bermuda, Cayman Islands, Netherlands Antilles, and Panama held almost two trillion dollars in United States debt.

A 2012 study by the Tax Justice Network gave an indication of the amount of money that is sheltered by wealthy individuals in tax havens. Conservatively, it estimated that a fortune of $21 trillion is stashed away in off-shore accounts, $9.8 trillion alone by the top tier, - less than 100,000 people who each own financial assets of $30 million or more. The report indicated that this hidden money results in a “huge” lost tax revenue - a "black hole" in the economy -, and many countries would become creditors instead of being debtors if the money of their tax evaders would be taxed.

Further, this system of tax evasion is “basically designed and operated” by a group of highly paid specialists from the world’s largest private banks (led by UBS, Credit Suisse, and Goldman Sachs), law offices, and accounting firms and tolerated by international organizations such as Bank for International Settlements, the International Monetary Fund, the World Bank, the OECD, and the G20. The amount of money hidden away has significantly increased since 2005, sharpening the divide between the superrich and the rest of the world.