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« Conflicts, Conflicts | Main | Levitt's Call for a Unified SEC/CFTC »

August 4, 2006

OffShore Trusts

The unexpected benefit of the 370 page report on tax scams by the Senate Permanent Subcommittee on Investigations is a detailed exposition of the use of offshore trusts, not only to avoid taxes, but also to avoid SEC reporting and disclosure obligations.  This has been going on for some time and the tax report has put a Congressional lens on it.  The SEC rules have always contained "look-through" standards of application:  ownership may be direct, "indirect" or "beneficial."  Indirect ownership depends on control and influence.  It is had to assess control or influence over offshore trusts.  Lawyers set these up and have for years, using offshore entity structures to obscure reporting and tax obligations.  Perhaps the Congressional focus and disgust with these entities will tighten up prosecution of offshore trust abuses and the prosecutions should include the lawyers that set them up.

August 4, 2006 in Corporate Governance | Permalink

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Comments

From what I have seen many of these off shore trusts are set up by a few for a network of people. What they do is set up these comapanies in Poland, the set up funds with no identifying name in Holland and finally they finalize it with numerical accounts in the Carribean.

I would also guess that these individuals who many are apparel brokers will manufacture in Asia with African material, sell to a tax free corporation outside the the USA and then sell at inflated price the product to their USA corporation which at a very low mark-up sells to Macy's or whomever.

Tax Avoidance? Is this something our prosecutors can find without tips, internationally enforceable subpeonas and airline tickets? Who knows, maybe this is all legal and designed to improve the USA?

Posted by: Gotham Sanity | Sep 20, 2006 10:48:54 PM

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