Washington (AFP)

Far from the Swiss mountains or the beaches of the Bahamas, South Dakota in the United States has become the figurehead of rural American states that have become tax havens by relaxing their tax laws to attract wealthy investors.

"During the last decade, South Dakota, Nevada and more than a dozen other American states have become champions in the field of financial secrecy," thus highlighted the vast investigation of the Pandora Papers.

Tax secrecy, regimes allowing companies to evade tax or pay nothing during a succession ... these states are in fierce competition to attract funds, both Americans and foreigners.

"About half of [US] states are in the running," Chuck Collins of the Institute for Policy Studies and one of the experts who provided background to journalists who worked on Pandoras told AFP. Papers.

These are above all "small states, in which a service industry more oriented towards finance will have great power," he underlines, mentioning Alaska, Wyoming or Nevada.

- Sioux Falls -

Need to create a shell company bringing together your international activities so as not to pay tax?

Delaware, a state where Joe Biden served as a senator for 36 years, "is sort of the first tax haven if you want to set up a limited liability company."

"And if you want to create a trust, states like South Dakota have changed their laws," explains Chuck Collins.

By offering these legal structures a lifespan of one hundred years, or even ad vitam aeternam, the assets included in them can be passed on from generation to generation, without having to pay part of them to taxes during the succession.

South Dakota, a rural state in the north-central United States, known for being home to Mount Rushmore, these faces of American presidents carved in the rock, and many bison, is a pioneer in the matter, attracted at the turn of the 1970s and 1980s by the financial windfall when its economy was at its worst.

The state thus began, in 1981, by authorizing loans at any interest rate, in order to attract the business of bank cards of the bank Citibank, and the jobs which went with it.

Then, "year after year, (...) the legislators approved legislation drafted by insiders of the trust sector", thus detail the Pandora Papers.

The tax law firms based in Sioux Falls are now praising, on their websites, the merits of these laws, the discretion, the low taxes, the regime linked to trusts.

"Client assets in South Dakota trusts have more than quadrupled over the past decade to reach $ 360 billion," the Pandora Papers survey further indicates.

- Financial opacity -

Dozens of other states have followed suit to varying degrees.

And, "in 2020, 17 of the 20 least restrictive jurisdictions in the world for trusts were American states, according to a study by Israeli academic Adam Hofri-Winogradow," cited by this survey.

The American states have also benefited from the postponement of certain investments, after a law entered into force at the end of 2018 in the Bahamas which requires the real identity of the owners of certain companies and trusts to be declared.

The United States thus comes 25th in the 2020 ranking of tax havens of the NGO Tax Justice Network.

In terms of financial opacity only, the leading economic power even offers itself a place on the podium, with the silver medal, just behind the Cayman Islands.

The United States hosts nearly a quarter (21.37%) of the global market for financial services intended for non-residents, also underlines the NGO.

The Biden administration is leading the front of the great powers for tax harmonization between countries.

The American president "is determined to bring more transparency (...) to the American and international financial systems," White House spokeswoman Jen Psaki reacted at the press conference on Monday.

© 2021 AFP