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Panama Papers: What is an offshore account and can I open one?

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A huge leak of documents this week lifted the lid on how the rich and powerful use tax havens to hide their wealth and dodge paying tax.
It was called the Panama Papers and now Prime Minister David Cameron’s been dragged into the whole thing.
But what’s Panama got to do with it? And can anyone open an offshore account abroad?
Here’s what has been going on.
Imagine if offshore accounts were piggy banks
Someone on Reddit explained it like this – using American currency of course – but you get the idea.
Reddit explainer
Can anyone open an offshore account?
You don’t have to be a millionaire to open a savings account outside the UK.
They can be used to help you save money in different currencies, which can be handy if you aren’t paid in British pounds.
Most accounts can be opened by anyone over the age of 18.
High street banks, including Barclays and HSBC, offer offshore accounts but you will need to invest at least £25,000 and £65,000 respectively to open one. Some others only need a minimum deposit of £1.
You are obliged to pay tax on the interest you earn from these accounts in the same way you would be in the UK.
What’s Panama got to do with this?
Panama is a country in central America.
Panama on a map
It’s well known for its golden sandy beaches, its canal and for being a tax haven for the rich.
Mossack Fonseca, a law firm which is one of the world’s most secretive companies, has been based there for 40 years.
Aerial view of the Panama City bay taken on March 23, 2015
Image caption Panama is one of a number of popular tax havens in the Caribbean
The millions of documents which were leaked appear to show how far they would go to help their clients launder money, dodge sanctions and avoid tax.
The law firm denies these claims and says it has never been accused or charged with criminal wrongdoing.
Although there are lawful ways of using tax havens, most of what has been going on is about hiding the true owners of money, where it has come from and avoiding paying tax on the money.
Critics of tax havens claim there’s one law for the rich and another for the rest of us, and that those who are evading tax are robbing services like our schools and hospitals of valuable money.
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1 Comment

  1. Hmmm where are the accounts of Ethiopian authorities repeatedly claimed by the disgruntled diaspora opposition????

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