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Economy

Bill Majcher: Panama Papers reveal Hong Kong's role in the world of tax havens

It should come as no surprise that China and Hong Kong have been revealed in the Panama Papers as being among the most prolific in hiding entities that use offshore financial centers and tax havens. This partly stems from the fact that Hong Kong was a British territory for most of the past 150 years, and it was the U.K. more than any other country that saw the economic opportunity in providing financial and professional services to those seeking a favorable tax or legal environment.

     It is also no coincidence that British territories over the past 75 years have dominated this offshore space, and why increasingly, corporate profits are parked overseas in low-tax jurisdictions with double tax-avoidance treaties. Laws in Panama and in many popular offshore jurisdictions are specifically tailored to circumvent the regulatory and disclosure burdens that exist in many developed economies. As often as not, English law forms the legal basis of many offshore jurisdictions, which is why Hong Kong, as China's gateway to the world, has so many Chinese nationals owning offshore holding companies and accounts.

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