The Kingdom’s biggest dirty little trade secret

Sat, 12 December 2015

Cam McGrath

More than $15 billion exited Cambodia in illicit capital flows over the past decade, stripping the economy of money that could have been used for development, a new report shows

A staggering amount of money was funnelled out of Cambodia in shady transactions over the past decade, with more than $4 billion exiting the country illegally in 2013 alone, according to new research.

In a report released this week, investigators from Washington-based Global Financial Integrity (GFI) said they found evidence that at least $15 billion was lost to illicit financial outflows between 2004 and 2013, most of it secretly shifted offshore using a technique known as trade misinvoicing.

The process [see sidebar], where companies misstate the value or volume of an import or export product on a shipping invoice, “allows criminals, corrupt government officials, and commercial tax evaders to shift vast amounts of money across international borders quickly, easily, and nearly always undetected,” the report said.

read more: http://www.phnompenhpost.com/business/kingdoms-biggest-dirty-little-trade-secret

One reason, that you will find 600 banks for 60.000 inhabitants on the Cayman Islands. 100 customers per bank. I remember, that refrigerators produced in Czechoslovakia, had been sold to the distributor in Grand Cayman. The distributor then sold those refrigerators to the German distribution branch of, I think it was BOSCH, and added around 50% of the purchase price on top, to keep the profits in Germany and therefore the taxes as low as possible. The refrigerators though were transported directly from Czechoslovakia to Germany. But this is a normal procedure, and I know lot of companies working in the same way and manner. But I would like to know how many billions in profits had been channeled to the Caymans during the last 5 decades.

One reason, that you will find 600 banks for 60.000 inhabitants on the Cayman Islands. 100 customers per bank. I remember, that refrigerators produced in Czechoslovakia, had been sold to the distributor in Grand Cayman. The distributor then sold those refrigerators to the German distribution branch of, I think it was BOSCH, and added around 50% of the purchase price on top, to keep the profits in Germany and therefore the taxes as low as possible. The refrigerators though were transported directly from Czechoslovakia to Germany. But this is a normal procedure, and I know lot of companies working in the same way and manner. But I would like to know how many billions in profits had been channeled to the Caymans during the last 5 decades.

And now with the offshore islands joining the banking information exchange treaties this is completely legal. In fact, these profits can now be brought into the mother country as tax exempt dividends.

The reasoning is that it's better for countries to know what's going on and having the funds be brought in, even tax exempt, than having the funds from those extra profits be permanently stuck offshore.

Canada and Barbados had such arrangement for over 20 years under a notwithstanding clause in their taxation treaty and it is now fast becoming the model of treating offshore subsidiaries or affiliates. Cayman has already converted to such open offshore arrangement and BVI and others are scheduled to follow.

The big problem is especially when trading in USD, offshore banks refuse to deal with US affiliated persons or entities.

....and nobody has any idea of....who....???

How much has left Thailand?