As far as data leaks go, the so-called Panama Papers dwarf any other public release of corporate or state files, including the ‘offshore secrets’ in 2013 and ‘Luxembourg tax files’ in 2014. The 2.6 terabytes-worth of 11.5 million confidential documents belonging to Panamanian law firm Mossack Fonseca has refuelled public rage at the tax privileges available to the rich and powerful. But the matter ought to be looked at with a cool head.
The privacy offered by offshore centres helps individuals in politically unstable countries or conflict areas to protect their wealth or even their lives by keeping sizeable assets safe and granting owners a financial low profile. Such jurisdictions can also offer ad-hoc structures to, say, a group of international investors coming together to direct capital into a risky market that does not otherwise offer products suitable to foreign buyers. Even when corporates use offshore centres to channel their international investments there may be benefits to the country of origin by way of higher tax revenues, as such investments – and the larger turnovers they could generate – would not otherwise exist.
