Nailing down criminality, though, is usually tough. It’s hard to prove deliberate intent to deceive in court. The question often hinges on matters of interpretation, what constitutes economic ‘substance,’ what corporate bosses were actually thinking when they set up these structures, and so on. And tax havens often don’t criminalise stuff that most countries would criminalise: for example, plenty of tax-related activity that would be considered criminal activity in most countries does not get treated under the criminal code in Switzerland.
When a company claims that all its decisions are taken in an office in Jersey, but it turns out that the relevant directors make all their decisions in London then fly out to Jersey once every few months just to tick the ‘economic decision-making in Jersey’ box, then there’s a deliberate subterfuge going on. There’s the old expression, “everyone knows what is going on.” That kind of behaviour could attract criminal penalties – and if it does, we can call it criminal.
All this just underlines our earlier point: a lot of what gets called “tax avoidance” is not ‘legal’, a lot is illegal, and a fair bit may be criminal.
As the author, Nicholas Shaxson, says “Governments need to get serious about beefing up their audit capacities: there is easy money here.” It’s just a puzzle why they don’t, isn’t it?