❗Help close the gap: We still need to raise $40,000 by the end of March. Donate now

Shell companies are at the heart of the "Panama Papers," but what are they?

Mark Garrison Apr 4, 2016
HTML EMBED:
COPY

Shell companies are at the heart of the "Panama Papers," but what are they?

Mark Garrison Apr 4, 2016
HTML EMBED:
COPY

The “Panama Papers” are raising questions about rich and powerful people across the globe using shell companies to stash their wealth. The leaked documents are largely about rich individuals, but high-profile companies use shell companies too.

A shell company is a legal entity that can certainly be shadowy, but is not necessarily good or evil. They can help corporations illegally hide income and evade taxes, or much worse. But shell companies can also help regular companies do lawful business.

Firms often set them up when they want to move quietly, such as a real estate company that wants to buy up multiple properties without signaling its intention, or a tech company that wants to camouflage its next move from competitors. Using a shell company can be preferable in certain situations involving raising capital or expanding overseas. And of course, companies use them to reduce tax burdens in ways that are legal, though extremely controversial.

Click the audio player above to hear the full story. 

There’s a lot happening in the world.  Through it all, Marketplace is here for you. 

You rely on Marketplace to break down the world’s events and tell you how it affects you in a fact-based, approachable way. We rely on your financial support to keep making that possible. 

Your donation today powers the independent journalism that you rely on. For just $5/month, you can help sustain Marketplace so we can keep reporting on the things that matter to you.