Exhibition, Portrait

The Secret World of Tax Havens: In Pictures

Main image: A premium casino for high rollers is situated on the 66th floor of the Trump Ocean Club, Panama. All images © Gabriele Galimberti & Paolo Woods, courtesy of INSTITUTE

Months before the Panama Papers were revaled, Gabriele Galimberti and Paolo Woods spent years exposing the secretive, luxury world of tax havens. The resulting series, 'The Heavens: Annual Report', aims to show an elitist world of perfectly legal tax evasion, a world of casinos, hotels, plush offices and golf courses, reserved for those who can afford not to pay.

Focus on the infrastructure

Jersey was just one of the locations to which the project swiftly moved after its start in the Cayman Islands. In all, the duo covered 30 countries, their focus shifting from the idea of the tax-dodging mega-rich individual to the infrastructure of tax havens and the way they operate. “It became even more interesting when it became focused on the infrastructure because then it’s not about an extremely wealthy person you’ve no relationship with, it’s about the company you buy coffee from in the morning that is not chipping in its share for the roads, the hospitals, the schools and the police,” says Woods.

Bicycle parking lot in the Zuidas, The Netherlands.

Bicycle parking lot in the Zuidas, The Netherlands.

“Tax havens are not just a tropical, eccentric thing. They are something at the heart of the way globalised finance works. If you are a multinational today, it’s improbable that you don’t have some form of tax optimisation; if you don’t, the chances are your shareholders will punish you for it because it would mean you’re paying too much tax in their eyes. The whole system is corrupt in some way. It’s not something where you can say, ‘Oh, it’s only the bad guys who do this.’ Everybody does it.

“We had this James Bond image of guys in Panama hats with sunglasses, cigars and suitcases full of cash. There is no cash. The money doesn’t even go to tax havens. The money is in banks in London or New York or Switzerland or wherever. It’s not physically in Grand Cayman, for example. It’s just routed through there for secrecy, so nobody can see what’s in a bank account.”

Businessman have a chat in front of Liberation House.

Businessman have a chat in front of Liberation House.

Woods describes the laws that govern tax havens as “Byzantine”, but the theory is quite simple. A company such as Starbucks has several subsidiaries, including companies in the countries where they do their main business – such as the UK, which has relatively high tax rates – and companies in countries where they don’t do their main business, such as the Cayman Islands or Luxembourg, which have relatively low tax rates. The accounts are then drawn up so that most of the profit is accounted for in a country where little or no tax is payable, rather than in the country where the business is actually done.

This means countries such as the UK receive little or no tax revenue from these companies, because profits are channelled through offices in the Cayman Islands or Luxembourg. The problem is compounded by negotiations on behalf of some companies that result in certain countries offering advantageous tax deals. “If I’m an accounting firm, I can go to the government of, for example, Luxembourg, and say: ‘Look, I think this could be an interesting proposition for bringing you some business. If you structure your financial system in this way, you will make a lot of money and we won’t pay any tax,’” says Woods. “This is the scandal in Luxembourg with PwC, where 340 corporations had secret agreements with the finance ministry to be based in the principality but not pay taxes there. And Luxembourg is an EU country. So accounting firms will go to different countries and ask them to structure their tax rules so they can attract investment but at the same time hinder tax revenues in other countries.”

Naval El Farveisa, 29, and his bride-to-be pose for their pre-wedding photos in front of the Marina Bay Sands Hotel.

Naval El Farveisa, 29, and his bride-to-be pose for their pre-wedding photos in front of the Marina Bay Sands Hotel.

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