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Tax Evasion Drives the Global Economy

On April 3rd, 2016, a trove of 11.5 million leaked documents from the world’s fourth biggest offshore law firm, the Panamanian services company Mossack Fonseca, were brought to light by the International Consortium of Investigative Journalists through a large network of media partners. Panama Papers, as these have come to be called, provide information about more than 214,000 offshore companies and bring to light accounts of individuals, including heads of states, government officials, sports and entertainment personalities from countries across the globe. In addition to their significance in the field of data journalism, they have also brought up the discussion on tax havens. 

Prabir Purkayastha talks about tax havens. Purkayastha clarifies that, in contrast to the widely perceived understanding of a “tax haven”, the money isn’t really "going anywhere”. An offshore tax haven like Panama do not imply large sums of money is sent to Panama. As he explains in his article on tax havens, "Tax havens have two functions: one is low taxes, the other is to hide who really owns the money. It is the combination of the two that brings the tax havens to the core of the global financial system. Tax havens are not working on the margins of the world economy, but are an integral part of modern business practice".

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