Who Doesn't Need an Offshore Account?

Legal tax engineering is a mandatory business practice for anyone who wants to be competitive in today's globalized world, and only those who are not entrepreneurs can afford to refuse to acknowledge this fact.

Wednesday, April 6, 2016


With the same firmness that we criticize businesspeople who evade taxes or bribe officials to get a contract, we must defend every business practice which is framed within the law to pursue the best use of available resources to generate wealth through the production of goods and services, which is what businesses do.

Those who are not entrepreneurs and live on wages which regularly come to them at the end of each month, have the luxury of claiming absolute moral purity in their actions. But this is only a claim that doesn't go very far. The fact is you don't need to be an entrepreneur to evade taxes, nor do you need to have a company registered offshore to commit tax fraud. A tax evader is anyone who pays for a good or a service accepting it without a receipt, letting the provider discount the sales tax. They are also those officials in institutions, forced to do so because their incomes exceed the established limits, who defraud the State by not declaring their personal income, as well as the doctors who do not hand over a receipt and only charge for consultations in cash so that no income is registered.

Of course there are tax evaders that must be pursued, but you do not necessarily have to look for those with an offshore account or company based overseas, which is perfectly legal, and is not a necessary condition for committing tax fraud as an entrepreneur. Tax evaders are entrepreneurs who -even without an offshore account - obtain an unwarranted tax exemption through a corrupt official, and of course those who simply do not declare their activity or pay any taxes to the state, knowing that the tax justice system in Central America is too slow and most of the time never shows up, disadvantaging the honest entrepreneur who does comply with their tax obligations.

In - ever harder and more global - competition, to survive as producers of goods and services, employers must use all legal means at their disposal to reduce their tax costs in the same way that they have to try to obtain raw materials for their activities at the lowest possible cost, whether they be material, financial, and even labor, within the limits imposed by humanity.

Among the legal options that an employer can choose is the type of company under which they will produce goods and services, on a scale which includes a sole proprietorship, simple partnership, limited liability, corporations, business groups, transnational corporations, offshore company, and the various possible combinations of these. In today's world, nations have failed to agree on the homogenization of ways to form business activities, and even less over the form and amount of taxes payable by companies, so that employers have to act in this environment, and not in the ideal world dreamed up by those who are not - nor want to be - exposed to the risk of doing business.

And it should be noted that any form of business organization can be used to commit criminal acts, not just offshore companies.

We applaud investigative journalism that manages to expose the evils that exist in all human activities. It is an essential activity that serves as a catalyst for actions of the justice system. Even in spite of the objections to the information robbery, such as the Panama Papers case, we do not object the use of information when pursuing the noble goal of unmasking criminals. But we do reject the use of any information for political or ideological confrontation objectives, not meeting the standards of fair journalism that avoids defamation and free public exhibition of people. Especially in Costa Rica, the handling of the information contained in the Panama Papers was far from what is good journalism, falling in the exact definition of libel, which devalues ​​the discovery of true episodes of tax fraud or concealment of capital of illicit origin, that it leaked documents laid bare.

We have selected a short list of articles worth to be read regarding the Panama Papers issue (in spanish):

- Empresarios y banqueros de Costa Rica refugian fortunas en paraísos fiscales
- Impresiones sobre los Papeles Panamá
- Empresas argumentan razones legítimas para crear offshores
- ¿Qué es la Ingeniería Fiscal?
- Glosario práctico para entender los PanamaPapers
- ¿Cuál es la relación de las offshore con la erosión fiscal?
- Proyecto OCDE/G20 de Erosión de la Base Imponible y Traslado de Beneficios
- Panama papers
- ¿Hackeo bueno, hackeo malo?

More on this topic

Amnesty Proposed for Companies to Move Out of Informality

June 2018

In order to facilitate the formalization of more companies, in Costa Rica the private sector has proposed to the government the implementation of a fiscal amnesty exclusively for the informal sector.

The Costa Rican Union of Chambers and Associations of Private Enterprise (Uccaep), proposes that the tax amnesty be carried out avoiding retroactivity and reprisals, and that it has a short period of duration. 

Big Data to Combat Tax Evasion

May 2017

In Costa Rica, the Ministry of Finance is using a predictive model designed with data mining techniques to determine the behavioral patterns of companies that might be circumventing tax payments.

Analyzing and crossing checking historical information from multiple databases, the statistical model used by the Directorate General of Taxation attempts to predict which companies are more likely to evade paying taxes depending on their historical behavior measured through transactions, tax returns and other data. By linking all of the information, they identify patterns of behavior similar to those of other companies that have evaded taxes in the past.

Panama Faces Up to the Panama Papers Crisis

April 2016

The Panamanian government has announced its willingness to review current practices in the legal and financial system and collaborate with other governments in legal proceedings over financial and tax offenses.

Following the massive leak of financial information from a Panamanian law firm, the Government announced that it is evaluating the practices relating to its financial system and that it will collaborate with other jurisdictions to investigate citizens suspected of criminal activities, including tax evasion. The announcement was made by President Juan Carlos Varela.

Anonymous offshore corporations & the bearer share

April 2008

Panama Corporations are known world wide for being the most anonymous corporations in the world.

There are many advantages to incorporating your offshore company in Panama. The company has strict privacy laws, easily accessible banks, they don’t recognize tax evasion as a crime or participate in any tax treaties and a corporation can be set up within a matter of days.