On November 5, a German newspaper obtained access to a bunch of leaked documents – over 13 million of them! These documents reveal offshore investments made by thousands of companies and individuals.
What are offshore investments? Typically these are large sums of money that are given to companies set up in countries with very friendly tax laws – these are often referred to as ‘tax havens’ (and hence the name Paradise Papers).
Why do companies and individuals seek these tax havens? It helps them avoid the higher taxes they might have to pay in their native countries, without breaking any laws.
However, tax havens are also sometimes used to hide money or to cover tracks in financial transactions. This is why the Paradise Papers are getting a lot of attention.
Amongst the companies mentioned are Apple, Disney, Facebook, McDonalds, Nike, and Uber. The papers also name individuals such as the Queen of the United Kingdom, Bono, Madonna, and many current and ex-leaders of various countries.
There was a similar leak of documents last year, which were referred to as “the Panama papers”.
Here is a video about this news story.