Tax authorities from the world's richest nations on Wednesday probed a mass of murky offshore dealings revealed in the huge Panama Papers data leak, just hours after police raided the law firm at the centre of the scandal. The leak of 11.5 million confidential financial documents from Panamanian law office Mossack Fonseca offered international tax officials meeting in Paris an unprecedented trove of data to delve into alleged wrongdoing, officials said.
Tax investigators discussed how to cooperate and share data unearthed in the Panama Papers, according to a statement released after the meeting by the 38-nation advanced economies club, the Organisation for Economic Cooperation and Development (OECD). Details of the talks, which brought together tax authorities from the OECD and the Group of 20 large economies, were not disclosed.
Australia convened the closed-door Paris meeting as chair of the Joint International Tax Shelter Information and Collaboration Network, an OECD initiative which seeks to crack down on cross-border tax cheats. "We are basically trying to get the bigger picture," Australian Tax Commissioner Chris Jordan told the Australian Financial Review business daily shortly ahead of the gathering.
"It has never been tried on this scale before," Jordan added. "A number of countries have got slices or pieces of the data and that's been very useful, but really, the start of the conversation is to work out who's got what, how we can pool that information and start to work together." Vitor Gaspar, who heads the public finances department at the IMF, said from Washington that the international community "cannot afford to spend more time on talk and rhetoric with no effective results."
He called "simply unacceptable" the perception that the well-off are not paying their fair share when "...in many places around the world people are asked to contribute more to public finances..." The tax officials gathered in Paris just hours after the Panamanian police's organised crime unit raided the headquarters of Mossack Fonseca, which says its documents were stolen in a computer hack. Prosecutors said the raids at the firm's headquarters in Panama City and other branches had passed off without incident, but gave no details on the results of the searches.
The world's business, political and even sports elite have been thrown onto the defensive by the findings of a year-long probe by a consortium of investigative journalists into the leaked documents covering almost 40 years from around 214,000 offshore entities. Although not illegal in themselves, offshore financial transactions may be used to hide assets from tax authorities, launder the proceeds of criminal activities or conceal misappropriated or politically inconvenient wealth.
Iceland's prime minister was forced to resign after it emerged he owned shares in the country's banks through an offshore company during the financial crisis. Leaders in Britain and Ukraine have faced questions over their taxes, while Russian President Vladimir Putin has sought to divert attention from scrutiny of his entourage by claiming a US plot against him.
China has been censoring online forums and media to stifle discussion of the papers, which showed relatives of eight of its political top brass also owned offshore companies. And wealthy citizens in Australia, France, India, Mexico, Peru, Spain and elsewhere face probes over suspected tax avoidance after their names figured in some of the documents. Panama has hit back at the blemish on its image, warning France of unspecified diplomatic measures if France does not remove it from a blacklist of tax havens.
Paris, which had removed Panama from its list of uncooperative jurisdictions in 2012, put it back on the list following the leaks. France is also urging the European Union and all OECD member states to follow suit. Such an international designation would deal a heavy blow to Panama's vital financial services sector, which the government has been trying to make more transparent. The European Union unveiled plans Tuesday to force the world's biggest multinationals to faithfully report earnings and pay their fair share of taxes, saying the Panama Papers scandal demonstrated the need for change.