21 Trillion Stashed in Offshore Accounts

July 23, 2012 International Tax CooperationOffshore BankingTax Havens

Money hidden in offshore accountsLONDON – Taxpayers around the world have hidden away at least USD 21 trillion in tax havens, evading taxes of approximately USD 280 billion per year.

On July 22nd the international tax research group the Tax Justice Network released The Price of Offshore Revisited, a new report detailing the extent of undisclosed financial assets which are currently held in banks and financial institutions in offshore jurisdictions.

According to the Tax Justice Network, wealthy taxpayers from around the world have hidden at least USD 21 trillion of financial assets in accounts in tax havens, and the total amount could be higher than USD 32 trillion if the tally includes non-financial assets such as property and vehicles.

The Tax Justice Network suggested that the hidden wealth is having a significant negative impact on tax revenues around the world, saying that if the undeclared money earned interest at a rate of 3 percent, and the income from interest was taxed at an average rate of 30 percent, then governments worldwide could see cumulative extra tax revenues of up to USD 280 billion. The potential tax revenues would also increase significantly once capital gains, inheritance tax and other taxes are applied.

The total amount which could have potentially been earned in taxes from the interest payments alone is twice as high as all of the spending on international aid and assistance currently carried out by all OECD countries combined.

Data in the report indicates that the money hidden across various offshore accounts is held by approximately 10 million people, with the richest 100 000 individuals holding nearly USD 9.8 trillion of the wealth.

Photo by Gerard Van der Leun