It’s all very well for me to be railing against some of the more uninspiring “Winter Blockbuster” exhibitions we’ve seen lately at the NGV, but when you consider the extravagant prices being fetched for art these days it begs a simple question. How can publicly funded galleries compete?

And then there is another issue to deal with - freeports. These are fortified warehouses which are usually located in tax-friendly zones around the world, such as within the boundary of an airport, where the rich and famous can store expensive works of art tax and duty free. This is because these artworks are considered to be “in transit” as they haven’t entered a specific country’s market, and thus are not subject to the taxes that would apply if they were installed, say, on the collector’s wall at home.

It would not be stretching credibility to describe a freeport as the Cayman Islands in steel and glass. These artworks are used as collateral for loans or as investments but either way, they are hidden from public view which is the tragedy in this story. A collector can purchase an artwork at an auction and have it shipped directly to a freeport where it can be stored untaxed for decades, even as the artwork appreciates in value. The collector can then sell the artwork without incurring any taxes associated with luxury goods or capital gains.

Freeports have their critics of course. Tax avoidance is one concern, money laundering is another. The opaque nature of them makes it difficult to track ownership and financial dealings. The European Parliament has concerns about assets stored in freeports possibly being used to fund terrorism, and there are calls for greater transparency and oversight.

According to a report in The Guardian, “The freeports are used to allow counterfeiters to land consignments, tamper with loads or associated paperwork and re-export the products without customs intervention, disguising the true origin and nature of the goods, and the identity of the original supplier. The commission said they were also used for narcotics trafficking, the illegal ivory trade, people smuggling, VAT fraud, corruption and money laundering.”

Some governments are considering stricter regulations to monitor these facilities. Thus the future of freeports is uncertain, given what appears to be a worldwide crackdown on tax avoidance strategies. The world’s billionaires may have to find other ways to hide their treasures from the tax authorities. And, of course, they will.

References;

JS Morlu

Wikipedia

“The Lost Leonado”, Directed by Andreas Koefoed

The Guardian

The Murky World Of The Freeport

Kusama and the crowds