The dictionary of avoiding tax

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The dictionary of avoiding tax

The language people use about tax is very complicated. People who save a lot of money by not paying tax want to use this complicated language to hide what they are doing. They want to make it look normal to break apart the social contract so the one per cent can make more money. These definitions should help.


under a Creative Commons Licence

HNWIs - High Net Worth Individuals

/hΛı nεt wә:θ ındı’vıdjυ(ә)lz/ noun

1 People with more than a million dollars. They have a lot of power over accountants and tax planners. Most major banks have separate departments only for them.

2 Together they have caused about 10 per cent of money in the world to disappear.

3 But when they want to spend a lot of money on a big wedding or a new swimming pool in the South of France, they find the money again.

Neutral Taxation

/’nju:tr(ә)l tak’seı∫(ә)n/ noun

1 This is the idea that taxes should have the least possible effect on how the market works. Because of the market, some people are very rich and some people have no food, the environment gets destroyed and people who make weapons and war get rich. But people say it is ‘inefficient’ for taxes to change this.

2 In this world, tax should be as low as possible – zero is best – so it is not too heavy on the economy to change economic decisions.


Advertisements like this one from a Swiss bank look OK - but does the 'protection' of wealth include protecting the HNWIs from paying the tax they should pay?

Double Irish

/’dΛb(ә)l ‘Λırı∫/ noun

1 In a double Irish, businesses have two separate Irish companies: one is a tax resident of Ireland and the other is controlled from, and is a tax resident of, Bermuda or the Cayman Islands.

2 They pass most of the money to the second company and then pay very low tax, at the Irish rate of 12.5 per cent.

3 Apple, Microsoft, Google and Yahoo, and Big Pharma companies like this way of paying less tax. If you’re having trouble following this, please see MEGO.

My Eyes Glaze Over (MEGO)

/mΛı Λıs gleız õ’vә/ phrase

1 Carl Levin (US senator) first used the phrase MEGO. It means the complicated, boring language of tax law. Most people think the language is so difficult to understand that they stop trying.

2 But if you have a lot of money, you can pay many accountants and specialists and you can win the game of avoiding tax avoidance game by throwing too many boring details at people who don’t agree with you.

The Singapore Sling /ờә sıŋә’p’ɔ:r slıŋ/ noun

1 The Australian mining company BHP Billiton likes this. The Singapore Sling is when you move products from an area where you pay a lot of tax to a small company in Singapore. That company then sells at market price, but the big transnational company can say that profit is made in Singapore, so they only pay tax in low-tax Singapore.

Offshore Magic Circle

/ɒf’∫ɔ: madЗik ‘sә:k(ә)l/ noun

1 A group of law firms in tax havens that are very important in helping HNWI people keep their money offshore (in other countries with lower tax). They are mainly based in UK dependencies eg. the Channel Islands, the Virgins and the Caymans, but they have offices all over the offshore world.

2 They also have links to a similar grouping of magic circle law firms that look after rich people in the City of London. They are very important in hiding your money from the tax authorities.

Beneficial Owner

/bεnı'fı∫(ә)l 'әυnә/ noun

1 This term means the real owner of the money and property registered in tax havens. They get other people - often lawyers – to run their companies, but they control everything and get the money.

2 Because they hide behind other names, the tax authorities cannot always see what they are doing. In many tax havens you can buy a complete ‘shell company’ with a CEO and board of directors (that don’t really exist).

Tax Treaty

/taks ‘tri:ti/ noun

1 People say they use this so they don’t have to pay tax twice on the same money. But it usually works so they pay no tax at all – in either place.

2 The rich countries of the OECD give advice for the tax treaties. And tax treaties are also used to stop poor countries making foreign investors pay tax.


/raυn-'trıpıŋ/ noun

1 This is when you put money in a tax haven and then send it back, in a different (hidden) way to your home country so it looks like it comes from another country.

2 The purpose of this round trip is that in some tax areas (eg. the US,) money from outside the country pays less tax than domestic investments - to attract more foreign money.

3 If US taxes go up one per cent, a lot more untaxed foreign money comes into the US from tax havens - as much as 2.8 per cent. A lot of this is US money, trying to look like foreign money, doing the round trip and not paying tax.

NOW READ THE ORIGINAL: (This article has been simplified so the words, text structure and quotes may have changed).