According to the International Consortium of Investigative Journalists, which was behind the global release of the so-called Panama Papers, around 40 per cent of the world's 'offshore companies' are located in the British Virgin Islands. An offshore company is one that operates on behalf of another outside the country of its registration, or the place where directors or shareholders are located.
The small group of island in the Caribbean has a reputation of being a tax haven -- or place where tax rates are relatively low -- like Switzerland, Hong Kong and Monaco.
Based in Melbourne, Andrew Conway is the C-E-O of the representative body, the Institute of Public Accountants. He says establishing accounts with offshore companies can be a way of reducing tax obligations at home.
"The fact that people go about their business trying to evade tax authorities, trying to avoid paying a legitimate share of tax is a huge concern for all economies around the world. The way the Australian law requires it to work is that any income generated, any transaction, should be reported to the Australian authorities," says Conway.
The British Virgin Islands has a population of around 28.000 people, but is home to more than half a million so-called shell companies - a type of offshore corporation. They can be set up there and in other tax havens for as little as one-thousand-dollars.
While looking like real corporations on paper, they may not have a physical office, and conduct no real business. To create an extra layer of secrecy, a random person can be appointed as a director, leaving the actual owner's name off key documents.
Andrew Conway says such companies are not necessarily acting illegally and can be used for legitimate reasons. But, he says, they also allow those linked to them to avoid declaring income and assets.
"There's a tendency to shift those accounts offshore and keep them away from the Australian taxation authorities. What that means is that the impost is placed on the Australian community. We rely on tax dollars in Australia to provide essential services. To provide education, schools, defence forces and so forth."
That's an area now being investigated by Australian authorities, as around 800 high net wealth residents were identified in the Panama Papers.
Federal Assistant Treasurer Kelly O'Dwyer says the government is committed to getting to the bottom of the issue.
"If people are deliberately structuring their affairs to avoid paying tax in Australia, that is clearly against the law," she stressed.
