$1.3 trillion reasons why offshore banking is hated and misunderstood

image offshore banking is hated and misunderstood

First and foremost, let's set things straight: Tax avoidance and tax evasion is not the same thing. The former is legal (the U.S.' IRS defines it here) and the latter is illegal.

Tax avoidance vs. tax evasion in brief

In short, tax avoidance is an action taken by a taxpayer (individual or organization) to reduce tax liability. On the other hand, tax evasion is underpaying taxes – deliberately and illegally.

Now, why understanding both early on in this article important? Well, it's because the following paragraphs will show you something interesting yet disturbing, especially for those who don't really understand what's going on in the International Tax systems and the offshore world.

So, are you ready to delve into the 'dark world' of offshore banking? Read on.

Why offshore banking is so hated when it's perfectly legal?

Let's present you with the hard data first: According to the latest report released by Oxfam, the top 50 US companies are 'hiding' a total of US$ 1.3 trillion in offshore jurisdictions.

image Data table

Apple, generating US$ 231 billion in profits, held US$ 181 billion offshore. They pay a tax of 25.9%, below U.S.' statutory tax rate of 35%, enjoying US$ 21 billion in tax breaks.

Alphabet (Google), just like Apple, held most of their profits offshore, at US$ 47 billion. Alphabet, however, pay taxes at a lower rate than Apple at 20.2%, getting US$ 12 billion in tax breaks.

General Electric, however, is a different case; the multinational corporation is paying a ridiculously low corporation tax at 6.7 %. Not only enjoying US$ 40 billion in tax breaks, they also receive federal loans, bailouts or loan guarantees from the Governement for the amount of US$ 28 billion.

There are more interesting data from Oxfam's list, but this article is not about the individual corporation's data. Instead, we'll just focus on the totals and averages, for the big picture:

  • In total, the 50 U.S. corporations received US$ 11 trillion in federal loans, bailouts and loan guarantees;
  • Collectively, the corporations made nearly US$ 4 trillion in profits;
  • In total, the corporations paid US$ 412 billion in federal taxes and received US$ 336 billion in tax breaks;
  • On average, the 50 U.S. corporations are taxed at 26.5 percent;
  • In total, the 50 US corporations stashed US$ 1.3 trillion of their assets offshore;
image legal offshore US

We can conclude several things just from the totals mentioned above:

  • The 26.5 percent tax rate is below the U.S.' statutory tax rate of 35 percent – some are paying more due to the nature of the corporations, and some are just tax exempt;
  • The U.S. Government received roughly about 30 percent in federal taxes, compared to the amount held, invested or secured offshore;
  • Yet, the U.S. Government paid the total amount of US$ 11 trillion to “help” or “support” the corporations, which dwarf the tax received, US$ 412 billion.
  • The 50 US corporations receive US$ 11 trillion in federal help, yet they have US$ 1.3 trillion stashed on offshore jurisdictions.

We could go on and on with our conclusion, but you get the point: For one reason or another, the government supports the corporations, largely by bailing them out from their bankruptcy.

What the 'analysis' reveal?

Our simplistic data analysis above – along with the content we consumed from the web - reveal some worrying realities:

  • Offshore banking/structures take the blame for being the “vehicle” for the tax dodgers – including those listed in the Panama Papers, as well as the 50 US corporations – to hide their money offshore;
  • Offshore jurisdictions – even the most reputable one – take the blame for helping tax dodgers hiding their money;
  • Those who have offshore banking accounts and/or offshore structures are considered as tax dodgers, money launderers, criminals and other negative labels by the mainstream media (truth: No, not the majority of them are bad guys);
  • We found that the U.S. Government is funded mainly by individual income taxes (46.2 percent) – but with the US$ 11 trillion of the Government's fund used to 'help' the Top 50 US corporations (read: just the tip of the iceberg; how about bank bailouts?) we can only wonder where the money for all of the federal loans and bailouts is coming from... yet all fingers seem to be pointing to offshore jurisdictions, accusing them as the corporations' accomplices in stealing the public's money.

Now you know why offshore banking and jurisdictions – as legal as they are today – are hated and misunderstood by the general public.


We have published several posts that are trying to clarify things for our readers. We, in essence, are clarifying that:

  • Offshore banking and company formation are perfectly legal, largely depending on the intent and motive of the offshore clients;
  • With all the bank bailouts, lockdowns, and any other form of capital control, individuals – or companies – can strategically protect their assets in more stable and politically/economically-sound jurisdictions – which happen to be located offshore and have lower tax rates;
  • The “1 percent” (a.k.a. the world's richest) may seem to have all the perks, but in reality, the average person can legally go offshore if they want to, for as low as US$ 500. Again, the legalities depend on the intent and motive of each individual and entity;
  • • ...and so on.

Alas, compared to the big news outlet online and offline, we – and other pro-offshore and pro-internationalization individuals, media, and companies – are rather insignificant in reach. We can only try to provide information from an objective point of view.

We do hope this article helps to shed light on the seemingly forever issues of legal vs. illegal of offshore structures. If you are feeling intrigued, you can consult with us on anything related to offshore banking and company formation.

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