Pandora Papers from an Offshore Expert’s Point of View

Pandora Papers from an Offshore Expert’s Point of View

10/14/2021 - 4:46 PM
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The Pandora Papers are all over the news these days. But, how about a fair review of the Pandora Papers by someone who actually understands the offshore industry? Here is a summary of the Pandora Papers by an offshore expert.

The Pandora Papers is a trove of stolen documents that include Trident Trust’s USA group, as well as several different offshore providers. The largest of these again is Trident Trust with well over 3 million records being released. 

The Pandora Papers include more than 11.9 million records for a total of 2.97 terabytes of data from 14 different incorporation firms. These files provided information on people from 200 countries including more than 330 politicians and 130 Forbes billionaires, and several celebrities. 

The documents included information on the beneficial owners of offshore and onshore structures as well as their nominees, agents, shareholders, directors, and officers. Most of the structures were from the BVI, Cyprus, Seychelles, Hong Kong, Belize, Panama, and South Dakota. 

While there were some files going back to the 1970s (from the Panama law firm of Alemán, Cordero, Galindo & Lee), most of the documents were from 1996 to 2020. They cover the formation of all types of structures, including holding companies, corporations, LLCs, trusts, and foundations.

As those of us in the industry know, many of the trusts and tax shelters are held right here in the United States. 81 of the largest trusts were in the Trident Trust offices in South Dakota. In addition, there were 37 trusts in Florida, 35 in Delaware, 24 in Texas, and 14 in Nevada. 

Tying the Pandora Papers back to the Panama Papers, it was found that over 500 BVI companies and 130 Panama structures left the embattled law firm of Mossack Fonseca. These companies, and probably many others, changed their registered agent or moved jurisdictions. 

The problem with the Pandora Papers and all “investigations” of this type, is that they are being conducted by left-leaning journalists and are incredibly biased. They see crime and tax fraud simply because someone wanted privacy in their financial dealings. They have no idea what these people reported on their tax forms, or what is legal or illegal in the 200 countries represented in this data dump.

These reporters assume someone is guilty until proven innocent… and this allows them to publish stolen information, causing financial and other harm without cause. And, along the same lines, what happened to not using the fruit of a poisoned tree? 

We see their intent in this quote from senior ICIJ reporter Will Fitzgibbon on NPR. “These are secretive, confidential documents from offshore tax havens and offshore specialists who work to help rich, powerful, and sometimes criminal individuals create shell companies or trusts in a way that often helps either obscure assets or in some cases even help avoid paying taxes.” 

This is an obvious attempt to paint the offshore industry as sinister tax cheats. We all have “confidential” documents we don’t want to be released, such as our tax returns. And there are many legitimate reasons to set up an offshore structure. 

Ok, I will get off my soapbox and attempt to be a little more professional (not my strong suit). It would be easier if these “investigators” approached the Pandora Papers with the assumption of innocence rather than an assumption of guilt. Isn’t that a founding principle of this country?

One article from the Pandora Papers was on Trident Trust’s activity in the United States. Those of us in the offshore industry have said for years that the US is the greatest offshore tax shelter in the world for everyone but Americans. Have a read through: Suspect foreign money flows into booming American tax havens on promise of eternal secrecy. But, again, read with an eye on how biased the verbiage is. 

My experience is in helping American’s set up compliant structures offshore. I’ll leave the foreign nationals coming into the United States to the large law firms that specialize in this area. 

There are many legitimate uses of offshore companies, LLCs, trusts, foundations, and other structures by United States persons. So long as you file the necessary forms and pay your taxes, there’s nothing wrong or nefarious with privacy, asset protection, and investing abroad. 

In fact, the most popular offshore structure for 2021 is focused on investing abroad. The Offshore IRA LLC is the number one seller in most offshore experts’ basket of products. This is also the most compliant and low-risk way to go offshore.

Americans have a significant portion of their savings in an IRA, Roth IRA, or defined benefit plan. Many are content to invest that in US stocks, treasuries, and/or in a managed portfolio. But, thousands are looking to take this cash out of the United States and invest in real estate or just about anything they wish abroad. This is especially true of Americans who spend all of their time, or some of their time, living in a foreign country. 

Then there are the offshore trusts which can help an American protect his or her assets from future creditors. If you’re in a high-risk industry or business, you might wish to put some cash aside in case things go sideways. So long as you do this well in advance of having an issue, and file all necessary IRS forms, your structure will be respected. 

And, finally, there are many reasons why a US person might need an offshore company. For example, if they are to invest in certain foreign funds, or own a business operated abroad. You might do this through a BVI company or some other tax-efficient jurisdiction. At the end of the day, these offshore companies don’t usually provide a US tax benefit, but they are still required for the investment or business opportunity. They are formed in a zero-tax jurisdiction such as the BVI because you don’t want to pay taxes in your country of incorporation. 

I hope this article has been helpful. For more information on forming a compliant offshore company, IRA LLC, or trust, please contact me at info@premieroffshore.com. I’ll be happy to assist you to set up in a legal manner. 

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