Wednesday, August 02, 2006

US Senate Homeland Security study of offshore tax shelters

Belize, the British Virgin Islands, the Cayman Islands, the Isle of Man, Nevis and Panama were among jurisdictions recently examined by Investigative subcommittee of the Senate Homeland Security in their yearlong study of offshore tax shelter. Mary Dalrymple from Associated Press in her yesterday’s publication IRS Chief Says Offshore Abuses a Problem has disclosed some facts, findings and proposed solutions that could have concern to US taxpayers as well as some offshore jurisdictions too.

It is estimated that tax havens allow Americans to avoid paying $40 billion to $70 billion in taxes each year and "an armada" of professional advisers provides all the possibilities for wealthy Americans to find legal or not so legal ways how to minimize their tax burden.

Should these numbers indicate to us that thousands of attorneys and tax advisors providing their services in USA and other countries are doing something illegal or advising their clients to do something illegal?

It is known by term definition that Tax Avoidance is the legal utilization of the tax regime to one's own advantage, in order to reduce the amount of tax that is payable by means that are within the law. In contrast - illegal method of reducing taxes is Tax Evasion. Tax evaded remains due. Tax avoided is not due.

If this term is correctly used by spokesman, then it means that attorneys, law firms and advisers assist wealthy Americans to save 40 - 70 billion US dollars per annum. Sounds like really good advertisement on their efforts to potential clients.

Most likely there should be another number not mentioned in particular report, representing billions of US dollars not paid by the means of tax evasion and this is to much extent the result of the work of unprofessional advisers.

To be continued.

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