‘About 50% of global trade is channelled through tax havens and 83 of the 100 largest multinationals are based in the Netherlands for fiscal reasons. The flow of money seeks the path of least resistance – but where exactly do those paths lie today?’
This is how graphic designer Femke Herregraven began a presentation about her new online game Taxodus. Herregraven designed the prototype of Taxodus, a game about offshore tax avoidance, during a master class at Sandberg-Mediafonds. The offshore system offers companies advantages in countries where legislation relating to non-nationals guarantees certain privileges, for example, when it comes to corporate structures, in certain areas of business confidentiality, or low taxation. Taxodus is an accessible way to discover how you can avoid paying taxes, and if you can’t get away with it completely, how you can make sure you pay the lowest possible amount.
Annet Dekker: Taxodus is a game about offshore business practices. How does it work?
Femke Herregraven: As a player you choose an existing multinational company or bank with a specific profile and then you look for the most favourable countries to set up a subsidiary and accumulate income by paying as little tax as possible. Each country has a specific transaction profile. For example, companies involved with Intellectual Property Rights find the Netherlands most appealing, while oil companies are drawn to other countries. The game offers a random number of options and calculates what these yield for you. You can compare the results with other countries to achieve the game’s goal of reaching the end with as little expenditure as possible. The game is based on actual information on withholding tax in global tax treaties.
AD: This isn’t a topic you usually encounter in art. Where does your interest in this subject originate?
FH: In 2010 I was asked by the Virtueel Museum in Amsterdam to research the identity of the Zuidas during a residency. The Zuidas, which literally translates as ‘South Axis’, also known as the 'Financial Mile', is a large, rapidly developing business district in Amsterdam. Much like Richard Florida, they wanted to ‘cheer up’ the neighbourhood. My questions about the companies located there received only vague responses; there weren’t any lists, or names, or post boxes, and with the exception of known names like Google and Facebook, the other companies that are based there was a mystery. To trace what type of businesses might be located there I spent weeks indexing the entire Zuidas from the Chamber of Commerce’s trade register. I indexed the occupants by street and house number and then compiled three telephone books from the data. All sorts of unusual data and patterns became evident – some addresses only have one occupant, while others have more than a thousand of the so-called mailbox companies that only exist on paper. This is also apparent from the names: some only consist of Roman numerals.
All this information piqued my curiosity and I wondered why these companies were situated there and what they were up to. The next step was delving into Dutch tax law and it became clear that there are enormous financial benefits to setting up a company in the Netherlands. This is a major selling point when Holland is promoted abroad. The entire offshore system has operated below the radar for a long time – sometimes we catch a glimpse of it – but quite how it works in its entirety almost no one knows. The first step to understanding this is visualising it to gain insights, and then you can ask specific questions. Taxodus classifies this information by visualising it: from mining in the Congo to oil companies in Italy and Libya.
Image: Taxodus by Femke Herregraven
AD: It all sounds very murky!
FH: It's all completely legal, but shady at the same time. If a foreign company doesn't want to open a physical office in the Netherlands, it hires a trust office that takes care of the bookkeeping, drafts the annual reports and appoints a CEO. There are countless small trust offices that manage huge numbers of foreign companies on paper. Everything is done according to Dutch law and the tax benefits in Holland are hugely beneficial for foreign companies. For example, small businesses in the Netherlands pay more than thirty per cent tax, while foreign companies avoid a large part of that taxation due to tax planning. The presumption that foreign companies basing themselves in Holland is beneficial for national employment is also misleading because most of these companies only exist on paper and don’t employ anyone. The trust offices advise against opening a physical office and taking on any staff because Holland attaches great value to its employment policy, which makes dismissing personnel difficult. A ‘mailbox’ company avoids all these complications.
AD: But the way in which you visualise this is also subjective because you manipulate the data.
FH: Yes, I selected companies that people will know or which appeal to the imagination. Unfamiliar names won’t really be noticed, but once you realise that almost everyone participates in this system, from Mitt Romney's Bain Capital, Walmart, Google and Facebook to Chanel, then it takes on a different immediacy or value for many people. If you look at this on a wider scale – globally – you will see, for example, that 60 per cent of large companies in Portugal, Italy, Greece and Spain use the Netherlands to take advantage of these types of constructions. This is legal and it’s also beneficial to the Netherlands, but when Dutch politicians insist on more transparency from Greece and lecture the country from up on high it smacks of hypocrisy. You see the same thing with a lot of development aid to countries in Africa: most of that money is diverted to the bank accounts of African leaders in offshore tax havens. Someone has done the maths: the debt of the entire African continent is less than the monies African leaders hold in offshore tax havens. A ‘mailbox’ company by itself is not that suspicious, but with everything else it creates the holes through which (public) money can disappear. My primary intention is to make these flows of money visible and question them, because once it’s out in the open people can decide for themselves if this is our idea of a sustainable economy.
AD: Of course, your game can also be interesting for existing companies who can use it to see where and how they can best invest? Is Taxodus the new Monopoly?
FH: Yes, in a way it is, but in reality companies have been doing this for ages. General Electric supposedly has a department employing about a thousand people who are busy with this on a full-time basis. I don’t think my game will suddenly improve things. Yet, the point is that the knowledge about international tax planning is now only in the hands of experts like fiscal lawyers and accountancy firms, and isn't accessible to the rest of us. That’s also what Taxodus is about, making a tool so that we can track what they’re up to.
Monopoly is an interesting comparison because it originated as a critique of capitalism and private monopolies. The games are comparable, but Taxodus goes further. If you make a move in the game that correlates to reality then you are informed about this and receive a reality-bonus. It’s at this point in the game that investigative journalism comes into play.
AD: How do you relate to investigative journalism?
FH: My projects frequently begin from a journalistic position and for this one I meet with journalists, fiscal lawyers and researchers quite often. Yet, I'm a designer and I don’t want to write articles but use other methods to provide insights into topics. For me design is not an end in itself but a way to research, express and contribute to debates in society. This means also collaborating with other disciplines and experts: a group of fiscal experts is currently helping to remove errors and provide feedback. Obviously, it's impossible to create a 1:1 translation, there will always be things that aren’t entirely accurate or that have to be left out, but it is important that the broad outlines are clear and correspond with reality.
AD: Why a game?
FH: Avoiding and evading tax is complex but you can learn the psychology of this system by playing the game. Taxodus is actually a kind of chess game. The rules aren’t simple and your eventual benefits depend on all sorts of interrelated factors. You have to continually take strategic decisions to advance in the game. All this information is incorporated into the game and the various tax treaties between different countries gradually become clearer. You are aided in this by advisors. At the start of the game you chose a particular advisor. Different advisors offer different advice, some will try to find legal alternatives while others try to convince you to bend the rules. Players can ask for a second opinion at any point in the game and manipulate regulations and treaties. This enables players to steer the game in the direction they choose. As in reality, a player has to have the possibility to have complete control. Ideally the game should be a do-it-yourself kit that you can add things to, an open game of strategy.
AD: What do you mean exactly? Can you name an example?
FH: The simplest way is to play it alone; the more complicated version is played with others in real time. At a certain point you can earn loyalty points by, for instance, evading high taxation for your parent company. Once you’ve arrived at the loyalty level, you can change roles, perhaps becoming a government employee who modifies regulations ever so slightly to make it more beneficial for yourself. You can also block other players in this way. This is an obvious reference to the increasing merging and blurring of the interests of large corporations and political leaders.
AD: How do you keep up with actual changes in the real world?
FH: It isn’t as if new information is constantly being made available – a lot of countries are reluctant or refuse to release ‘sensitive’ information. Tax treaties and regulation doesn't change too often, but when they do, these changes will also be incorporated in the game. The English researcher Nicolas Shaxson, who is very active in charting the offshore system, says that people have to first become aware of what’s happening before they can think about how to deal with it. I hope my game and visualisations can contribute to this awareness raising.
AD: When or how does the game end?
FH: You have a certain amount of time before you have to submit an annual report for your company, then your trajectory is incorporated into the database and you can see what your score is. You can also compare it to other players and download their fiscal structure, which adds an element of competition and makes it a crowd-sourced investigation. By playing you contribute to the research and help expose the layers.
AD: Will Taxodus be a commercial success?
FH: My main concern is to make a tool that makes this small yet incredibly significant part of our opaque financial world more transparent, and especially more public. I think artists have a responsibility to broach topics like this. People find it all quite shocking when I tell them about Taxodus, but for those who are directly involved in the actual system it’s mere child’s play. This type of project can stimulate discussion and determine what is and what isn’t desirable.
This approach was shown to be successful with another project, the Art Reserve Bank. We set up a bank with a small group of artists and designers and introduced a new currency in the heart of the Zuidas as a way to encourage discussions about the financial sector. Our bank – a vault, an exchange counter and a glass house with a minting press: a bank brought back to basics – is located across from the ABN AMRO headquarters, and each day some of the employees and other people come by to see what we’re doing and have a chat. People also buy our coins, which are designed by a different artist each month. It doesn’t always go smoothly, but there is certainly enough curiosity. One problem is that people are personally interested but refuse to make any statements in a professional capacity. De Nederlandsche Bank (the Dutch central bank) recently sent us a letter stating that we cannot use the word ‘Bank’, threatened us with a fine of up to 2 million euros and invited us for a talk. These types of discussions are what we aim to achieve. Our goal isn’t necessarily to introduce a new currency; instead we want to underscore that fact that the bankers and financial experts of this world do not have exclusive rights to debate and decide what happens on financial markets.