Home  News National News US legislators call for more scrutiny
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US legislators call for more scrutiny |
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Saturday, 02 August 2008 |
United States legislators have called for greater scrutiny of Caribbean and other offshore tax havens after a report claimed that a building in the Cayman Islands housed more than 18,000 offshore firms.
''We're going to find a way to make a huge dent in this problem,'' said Senator Max Baucus, the Democratic chairman of the Senate Finance Committee.
Baucus said when the US Senate first scrutinized Ugland House in the Cayman Islands in 2004, more than 12,000 offshore companies operated there.
''Remarkably, in the last four years, the Ugland House has found room for 6,000 new tenants, without even adding a new floor,'' he told the Finance Committee on Thursday.
A Senate panel said American tax evaders, through offshore banks, cost the US government over US$100 billion annually.
The Government Accountability Office (GAO), the investigative arm of the US Congress, said that five per cent of the companies that use Ugland House were American-owned, and that another 40 – 50 per cent had a US billing address or other connections.
The GAO report said over 700 US firms are incorporated in the Cayman Islands.
But the director of tax issues for the GAO, Michael Brostek, said while some of the American concerns were legitimate, others weren’t.
Testifying before the Senate panel, Jack Blum, a Washington-based tax lawyer, said wealthy Americans were avoiding tax by using the British Virgin Islands (BVI), Nevis and Belize.
He said that there were more than “500,000 shell companies” operating in the BVI.
“It is important to understand that the structures are mere pieces of paper with no commercial reality,” Blum said, adding that Nevis is also home to “tens of thousands of corporations”.
He said that in Belize one can be the “grantor, the trustee, and the beneficiary” all at the same time
Last week, a US Senate subcommittee also called for the establishment of tougher laws to combat offshore tax havens in the wake of a report accusing banks in Switzerland and Liechtenstein of helping rich Americans commit massive tax evasion.
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