How the rich avoid taxes? --- Revealed by Paradise Paper

As I was reading Rich Dad and Poor Dad by Robert Kiyosaki, One popular quote stated by Leona Helmsley stands out :

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Idea of taxation was sold to the community because masses believed in Robin Hood fantasy, or taking from the rich and give it to the poor. But in reality, the riches are not taxed!! It's the middle class, the upper educated upper income class are the one paying for the poors!

To understand what really happened, let us look at the history of taxes. Originally, in England or America, there were no taxes. Occasionally, there were temporary taxes levied in order to pay for wars. Fo r instance, taxes were levied in UK for the fight against Napoleon from 1799 to 1816, in America to pay for the Civil Wars.

It took approximately 50 years in both England and America to sell the idea of a regular income tax. The idea of tax was only massively accepted when the public was made to believe in Robin Hood fantasy. Masses voted for the law, and eventually it became constitutionally legal. The rich used their wealth to create legal loophole, hire smart accountant and attorneys. The rich don't simply comply, they're constantly looking ways to avoid taxes.

While you! You, the average taxpayer, probably pay about 20% to 30% of your annual income to your government in the form of income taxes

This is still in play today, as shown in the Paradise Papers published by International Consortium of Investigative Journalists.

Paradise Paper

Paradise paper are a huge leak of financial documents reveals how the riches keep their wealth in offshore investment in order to avoid tax. The documents were leaked to the reporters Frederik Obermaier and Bastian Obermayerfrom the German newspaper Süddeutsche Zeitung.

This financial leak involved the offshore legal service provider Appleby and corporate services provider Estera. People who are involved, rank from Prince Charles himself down to celebrity F1 champion Lewis Hamilton and Facebook.

Full documentary about Paradise Paper by VICE news alternative media :

DIY Tax Evasion

From this paper, the rich showed us how ridiculously easy for them to evade tax. Say that you have million of dollars to hide from taxman. First, you have to find an offshore service provider. If you can flash enough cash, your local banker might be kind enough to show you the way to reach such provider. There's lot of website which provide such service, but why risk it as there are so local advisers operating in the shadows?

You did your research, and concluded that Cayman Island is the best choice. Its near to your country. It's in the British Overseas Territory and comprise of three islands, the largest being being Grand Cayman.

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As you can see from the map I included above, it's full of vibrant and tonnes of sea activities can be done. So while you attend for paperwork in Cayman, its a great vacation for you too! To save your time to find the safest way to put your money, I suggest you to make a pilgrimage stop at the Ugland House in George Town (Grand Cayman Island). They're registered by thousands of global companies. And heck the data is even on wikipedia, proudly stating that

Ugland House is the registered office address of more than 18,000 Cayman companies and other business entities.
During his first presidential campaign, U.S. President Barack Obama referred to Ugland House, raising questions over the number of companies with a registered office in the building.

Even former President of USA can attest to that, it'll be foolish not to visit there. This local law firm will provide you a choice of plans that offer layers of trusts and corporation, making a hell for the taxman to track down who is the real owner behind the account.

Next step, your service provider will provide you a frontman. These frontmans are usually nominee directors of hundreds of companies. They're doing this for living. They volunteer themselves as scapegoat of the fund holder. On this paper stated, they just have to sign the documents provided by the "LAWYERS". No question asked. And it's in their agreement that they will not reside in the same country as yours, so you're safe from the taxman of your own country!

Trust Funds, Game between Trustee and Beneficiary Owners

In order to understand what is a trust fund, I present to you great explanation video by Boone Wealth Advisors :

Trust basically is a diversification of ownership. For instance, a father has one million dollar to pass on to his child. But his child is too young to be financially capable of managing it. So the father build a trust, appointed his lawyer as "TRUSTEE" while the father's child as "BENEFICIARY OWNER". The task of the TRUSTEE is to pass on that one million dollar to the child until they reached 25 years old. So here we have two party that are legal owners of the funds : THE BENEFICIARY OWNERS and TRUSTE. But keep in mind, father no longer have any control in law over their funds.

Back to our DIY tax evasion, the trustee is the nominee directors that I mentioned above. And YOU, are the beneficiary owner. The papers that the nominee directors signed is the statement saying that you're the rightful owner of the funds, and the best part of all it is certified by law!

This asset in trust funds will eventually be part of the shares of the company which is organized by this nominee director. The loophole in US law is that, corporate can be registered just by disclosing who is the director but never the shareholders of the company. Therefore the shares can be issued by the nominee director and it is subjected to the secret power of attorney! How easy is that?

How do you get your money back?

If you're smart enough, you should figure out we want to avoid the local bank at all cost. An oversea transaction to your own account will be too obvious and raise suspicion. So what are the other ways to get your money back? Refer back to the Paradise paper, and how those experts did it.

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This is where insurance policy comes into work. Insurance policy stated that there is no tax for the beneficiary owners. So how can you apply that to our "tax evasion scheme"? First, you need to find someone who is dying, be your relatives friends, or even anyone. Quoted from wikipedia :

Of the roughly 150,000 people who die each day across the globe, about two thirds—100,000 per day—die of age-related causes

So it shouldn't be a problem. So your dear Uncle or Aunty Maria dead the funds will be transferred back to home country. TAX- FREE! If this seems to be too gruesome. Don't worry there's tonnes of way too.

Source, Taken from IRS

Another tips might be cryptocurrency? Uhem... Privacy based coins like Monero, PIVX, Zcash.. They stand a bright future here.

Conclusion :

While the riches are not paying taxes, and we as the rest of 99% works our ass of everyday just to feed our child or to have a comfortable home and still 20 - 30% of our income is fed to the government. Tax is supposed to be levied on the riches but in reality, it's the middle class who paid the most. Are we in an uphill battle? Will we ever win the game of inequality in society?

Sources : https://www.icij.org/investigations/paradise-papers/