The recently released Paradise Papers may seem like a replay of the Panama Papers, but in terms of respectability of jurisdictions and their standing in the financial world, Bermuda and Panama are not — and have never been — in the same league.

Bermuda has never been one of the Caribbean tax havens (it is not even located in the Caribbean) and is a very well-regulated and sophisticated financial jurisdiction.

In fact, Bermuda is the second-largest reinsurance market in the world.

Journalists have been quick to point out that individuals and companies whose names appear on the lists have not necessarily done anything illegal.

But that has not stopped them from naming those individuals and companies, and the mere fact they have been named already raises the possibility of taint.

Again, the media acknowledge that it is quite legal to engage in tax avoidance but then raise issues as to the ethics and morality of the practice.

This is not an easy subject to debate. Either what one is doing is legal or it is not. And if it is legal, that should be the end of the matter; no company or individual should need to justify what it or he or she has done.

If any government does not like how the law is working out, it is free to change it. As one judge in an English case famously said, the doors of parliament are open every year to the commissioner to seek to amend the law.

When a government, nongovernment organisation (NGO) or journalist raises the question of ethics and morality in relation to a taxpayer, one starts travelling along a very rocky road.

In every country in the world tax is governed by a statute passed by the legislature. Interpretation of that statute is a legal question based on the relevant facts and circumstances.

Whether tax is payable or not payable is a question of law based on the facts. The minute one introduces what might be called qualitative or soft issues, one opens the door to the taxpayer raising the same issues.

For example, in one case an NGO criticised an investor for structuring its affairs such that it avoided withholding tax in a particular country in Africa, saying the tax avoided could be compared to the amount of aid given to that country. This implied that but for the avoidance, there might not have been the need to grant the aid.

However, the taxpayer might have responded that in that particular country, the governance is not what it might be, the human rights record is not of the best, the level of corruption and wasteful expenditure leaves much to be desired and if those elements were not present, there would not be the need for aid either.

It is totally unacceptable for a taxpayer to base its calculation of its tax liability on such qualitative or soft issues such as the extent of corruption or the human rights record of the relevant country. The only correct basis to determine the tax liability is the law, as interpreted by the courts.

And if that is to be expected of the taxpayer, it must be expected of others as well.

Moreover, the idea that island economies such as Bermuda, Jersey, Guernsey, Isle of Man and so on are tax havens in the traditional sense, where transactions are shrouded in secrecy, is an outdated concept.

Most are now highly regulated and there is a great deal of transparency, especially when it comes to tax affairs.

As from 2017, there will be an automatic exchange of information among most countries in the world that have signed up to the Common Reporting Standards, where financial institutions will report investment details to their local tax authorities, who will then report those details to the tax authorities of the country of residence of the relevant investor.

So if a South African resident has a bank account (or a trust with a bank account) in Jersey or Guernsey or Switzerland, that information will be exchanged and brought to the attention of the South African Revenue Service (or the tax authorities in the UK or France or Germany, or wherever). To suggest that hiding money in these jurisdictions is to rely on secrecy is simply no longer a correct perception.

Mazansky is tax director at Werksmans Attorneys.

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