The U.S. Committee on Homeland Security met today to discuss the problem of Shell corporations. Apart from the fact that they cause a huge revenue loss to the government, they are also a serious threat to national security. The panel is trying to find the best way to tackle this menace.
Senator Carl Levin (D-Mich) is the one at the forefront of the fight to tackle shell corporations. The people who run the corporation are allowed to be hidden. As a result of this even in cases like terror financing the ownership of the corporations cannot be ascertained.
Every year a few million corporations like this are established in the US. Even if only a few are involved in tax evasion it comes to a substantial number. The committee would like to draft legislation that would increase the transparency in Business Formation. There would then be a Federal standard on this that would require states to modify their hidden ownership laws. However there is some opposition to this approach on the ground that it infringes upon the individual State’s freedom. Nevada is one such state that has liberal laws regarding hidden ownership of companies. Let us see whether this results in any significant change to the law.