By Antonio Mwanza
– Zambia is a tax haven for China men
The Paradise Papers is a set of 13.4 million confidential electronic documents relating to
offshore investment that were leaked to a German newspaper and released on 5 November 2017 into the public domain. The documents originate from the offshore law firm Appleby , the corporate services providers
Estera and Asiaciti Trust , and business registries in 19 tax jurisdictions. They contain the names of more than 120,000 people and companies. Among those whose financial affairs are mentioned are Queen Elizabeth II, the President of Colombia, Juan Manuel Santos , and the U.S. Secretary of Commerce, Wilbur Ross as well as Mr Hakainde Hichilema.
According to the Boston Consulting Group , the amount of money involved is around $10 trillion.
Offshore investment is the keeping of money in a jurisdiction other than one’s country of residence. Offshore jurisdictions are a commonly accepted means of reducing the taxes levied in most countries to both large and small-scale investors alike. Poorly regulated offshore domiciles have served historically as havens for tax evasion, money laundering , or to conceal or protect illegally acquired money from law enforcement in the investor’s country. However, the modern, well-regulated offshore centres allow legitimate investors to take advantage of higher rates of return or lower rates of tax on that return offered by operating via such domiciles. The advantage to offshore investment is that such operations are both legal and less costly than those offered in the investor’s country – or “onshore”. Locations favored by investors for low rates of tax are known as offshore financial centers or (sometimes) tax havens .
Offshore centers are widely used and are accessible to anyone who can meet the minimum investment amount or pay the obligatory fees required to open such an entity. Investopedia indicates that, “More than half of the world’s assets and investments are held in offshore jurisdictions and many well-recognized companies have investment opportunities in offshore locales.”
Payment of less tax is the driving force behind most ‘offshore’ activity. Due to the use of offshore centers, investors are able to conduct investment activities in a more profitable fashion. Often, taxes levied by an investor’s home country are critical to the profitability of any given investment. Using offshore-domiciled special purpose mechanisms (or vehicles) an investor may reduce the amount of tax payable, allowing the investor to achieve greater profitability overall.
This is a smart way of maxmising profits by ensuring lower tax burdens. And it absolutely legal. However, some find this behaviour less patriotic because it denies one’s own country the very money needed for investment through taxation in one’s own country. Thus the question is not about legality but morality. And people ought to understand that issues of morality can be very subjective and can also be dependant on one’s conscience hence it depends on which side you are.
Infact, Zambia is a Tax Paradise for foreign investors who are given huge tax breaks. The Chinese and their kin are all on tax holiday in Zambia. This is partly why the Asian friends of ours are investing billions of dollars in Zambia and the rest of Africa because the massive tax breaks they benefit.