Is it legal? Yes. Is it moral? Ask a bishop. The old adage goes deep into the heart of what our modern legal code stands for. It is also an invitation to look into our own selves and see where it is we stand. As a business and economics magazine, Profit does every now and then find itself in a position where a moral judgement has to be taken. Business ethics are important, especially since big decisions have big consequences.
In the case of the recently revealed Pandora Papers, there is a strange forked path between the moral and the legal. The area can often be gray, and at other times very clearly either right or wrong. On this occasion, we will refrain from making a call on whether offshore accounts are good or bad. That is not the scope of this article, and perhaps best left for another time. What we do feel, however, is that there is a dearth of information and understanding about what exactly offshore accounts are and how they work.
People simply hear offshore and assume corruption at worst and greed at best. They are not necessarily wrong, but the assumption, even if correct, is not based on facts. Back in April 2016, then opposition parliamentarian and now Prime Minister Imran Khan had declared in a tweet that “the only reason people open offshore accounts through Panama is to either hide wealth, especially ill-gotten wealth, or to evade tax or both. But again, little was said about the nature of these offshore accounts.
Generally shady, and at times ingenious in how they manage to avoid tax, these accounts have a complex history and a simple premise. That premise is that while tax evasion is illegal, tax avoidance is not, and offshore accounts are a tool to avoid tax rather than evade – but a tool that often ends up blurring that fine line between avoidance and evasion. For this purpose, to explain the reasoning behind these ‘tax havens’ as they are known, this article will approach the subject at times from a devil’s advocate position.