1st Law & Political Science Conference, Vienna

OFFSHORE SOCIETIES IN “PANAMA PAPERS” ERA. LATIN AMERICAN DILEMMAS ABOUT TAX EVASION AND FOREIGN INVESTMENT INCENTIVE

WALTER RENÉ CADENA AFANADOR

Abstract:

The research problem is: Should the Colombian State restrict the inflow of capital through the use of offshore companies and avoid tax evasion in this way? This problem contemplate two current scenes: Firstly, Colombian State should prevent the inflow of foreign investment based on offshore companies established in tax havens, because these are used as a strategy to avoid paying taxes. Secondly, Colombian State should not restrict access of foreign investment by means of offshore companies. However, to guarantee due taxation cooperation agreements with those countries considered by the OECD as tax havens, should be signed in order to achieve greater control and monitoring of financial movements. The presentation defines the legal nature of offshore companies, assessing their advantages and the relationship they have with tax havens. It describes the effect of Colombian law on the issue and the impact that these societies have on the system of taxation and the financing of social policies. It identifies the criminal consequences that arise when these types of societies are used as a mechanism of money laundering or tax avoidance and will analyze the implications for a developing country such as Colombia, to restrict or prevent their entry into the country.

Keywords: Offshore Society, Tax Evasion, Panama Papers, foreign investment, Latin America

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