Eight Crazy Tax Scandals that Cost Billions

Global Tax Scandals

Global Tax Evasion

Over the past few years, more and more tax evasion scandals have surfaced in the news. That’s no coincidence, as a whopping $600 billion is lost to tax avoidance every single year. And while very little has been done about it, various leaks have shown us the massive scale of tax evasion going on among the world’s ultra-rich.

Here, we are going to be taking a look at the eight craziest tax evasion scandals that have surfaced over the past few years.

  1. The Panama Papers

In April 2016, a whistleblower leaked 2.6TB of data to German reporter Bastian Obermeyer of the Süddeutsche Zeitung. And what those 11.5 million documents showed shocked the world – a gigantic network of offshore banking accounts in remote tax havens, used by the world’s billionaires and its ruling elites and public officials.

As a result of the leak, the data of over 200,000 offshore shell companies was made public, all controlled by the same law firm, Mossack Fonseca. They revealed what many already suspected, namely that most of the world’s super-rich hardly pay any taxes at all.

The long list of almost 40,000 individual and corporate clients includes 12 world leaders and 128 public officials, in addition to many famous names. From movie star Jackie Chan to former UK Prime Minister David Cameron and the Spanish Royal Family, everyone who has significant money to their name seems to be involved in this massive tax evasion operation.

While this leak only scratched the surface of what the world’s super-rich are up to, it did help governments around the world recover more than $1.2 billion over the past four years.

  1. The Paradise Papers

While they have a similar name and were published by the same reporters as the Panama Papers, the Paradise Papers are a different set of over 13.4 million documents detailing offshore investment schemes of many people and corporations.

More than 120,000 people and companies are named in the leaks, and stories and details are still emerging to this day. Still, the Paradise Papers received very little media attention compared to their Panama counterparts. The reason for that is that the schemes exposed in this leak, while still immorally costing governments billions of dollars, are technically legal.

The papers revealed the way corporations funnel money through offshore entities to, in some cases, entirely avoid paying any form of income tax. Corporations named in this leak include Apple, Nike, PokerStars, and mining giant Glencore, among others. Individuals named include political figures such as Prince Charles, Queen Elizabeth II, and US Secretary of Commerce Wilbur Ross, as well as entertainment personalities like Shakira, Madonna, and Emma Watson, and even prestigious universities like Oxford and Cambridge.

  1. Germany’s €31.8 billion “ex/cum” scheme

In 2017, German financial scientist Christoph Spengel exposed a series of “cum/cum” and “ex/cum” schemes that, according to his calculations, had cost the German government a whopping €31.8 billion since 2001, the biggest tax fraud scheme in German history.

These are very complicated financial schemes that include national and foreign banks and fraudulent tax refunds. The last of these schemes were finally outlawed in 2016; but until then, they caused billions in damages all over the world.

According to the German Ministry of Finance, about €1.1 billion of the almost €32 billion has been reclaimed so far. But that’s only a tiny fraction of the total. The damage, in this case, has been done.

  1. Pfizer’s ongoing tax scheme

Between 2010 and 2012, Pfizer earned over $43 billion globally, with its offshore accounts reaching $73 billion in profits. Yet, in the US, Pfizer reported $9 billion in losses for the same period, which means they did not pay any tax whatsoever.

This is one extreme example of a corporation using existing tax structures and multiple offshore financial havens to move around funds to avoid paying taxes. And if that wasn’t bad enough, Pfizer also received $3.4 billion in federal contracts during those two years. So, they did not only evade their way out of paying taxes on $43 billion but also received a boost by the government they are essentially scamming.

At the time of writing, Pfizer has yet to face consequences for their tax evasion schemes. Currently, no legal action is underway to reclaim any of the undoubtedly billions of lost tax dollars.

  1. Citigroup’s $11.5 billion heist

In 2012, Citigroup registered offshore profits of $42.6 billion, paying no taxes whatsoever in the US. They essentially heisted $11.5 billion from the US government.

This comes as no surprise, as the multinational banking and investment corporation is one of the top lobbyists in the US, spending $6 million every single year to make sure their interests are represented in Congress.

They do so by employing the very people that used to work there, with roughly 85% of Citigroup lobbyists being former members of Congress or their staff. Like most multinationals, they wield enormous influence and manage to bend the rules according to their will.

  1. General Electric’s 2.4% tax rate

In the ten years between 2002 and 2012, General Electric registered profits of $88 billion but only paying a minuscule tax rate of 2.4%. That is only a tenth of the 24% tax rate the average American worker has to pay every year, and they hardly bring home even 0.00006% of that money. And that’s not all, аs the company also received $29 billion in government subsidies.

Allegedly, General Electric’s 2011 tax return spanned a whopping 57,000 pages, showcasing the extraordinary lengths the company will go to in order to avoid paying their fair share of taxes.

  1. Big Tech’s Loophole abuse

According to a report by the non-profit organization Fair Tax Mark, the so-called Silicon Six – which consist of Amazon, Apple, Facebook, Google, Microsoft, and Netflix – have avoided over $100 billion in taxes in the territories they operate for the years 2010-2019.

This number is not limited to the US but includes these companies’ operations all over the world. It comes as no surprise that this type of evasion takes place everywhere, and everybody’s at it.

  1. One in five of Britain’s biggest firms pay no taxes

In 2019, a report by The Mail on Sunday found that one in five of Britain’s biggest FTSE 100 group companies paid zero taxes and in some cases even received tax credits from HM Revenue & Customs.

Giant corporations like BP, Royal Mail, and Centrica are named in the report. BP, for example, registered £5.6 billion in profits last year, while still receiving a tax credit of £134 million. So, the multinational oil giant was a net receiver of tax money in the UK!

The report also disclosed that some executives had been paid more money than the respective company paid in taxes that year. Royal Mail CEO Rico Back, who got paid £1.4 million on top of a £5.8 million bonus for joining the company. Now, this might seem appropriate considering the company made £39 billion in the UK that year. What’s not appropriate, however, is that Royal Mail also received a tax credit of £93 million that same year.

Key Takeaway..

Tax evasion is a massive issue. As we’ve seen, everyone from multinational enterprises to royalty to movie stars is doing their best to avoid paying their fair share of taxes – or anything at all, for that matter. And while the eight scandals we went over are shocking enough, they merely represent the tip of the iceberg. The full extent of the problem is far, far worse.

About Sashi 534 Articles
Sashi Singh is content contributor and editor at IP. She has an amazing experience in content marketing from last many years. Read her contribution and leave comment.

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