The Panama Papers saw 11.5 million confidential documents leaked that named 12 current and former heads of state and almost 200 politicians from around the world as clients of disgraced Panamanian law firm Mossack Fonseca.
Of the 213,634 offshore companies set up by the law firm between 1970 and 2015, at the time the data was leaked 55,728 were still active.
In response to the leak, the Parliament set up a committee of inquiry, which reported that, “Mossack Fonseca is not the largest firm in the offshore secrecy business, which indicates that the Panama Papers can be construed as only the tip of an iceberg”.
The committee found that the company had a share market share of around 5-10% across the 21 jurisdictions in which it operated.
Call to action
The Parliament said that the Panama Papers have shaken citizens’ trust in the EU’s financial and tax system and called on member states to be proactive and not wait for media revelations to address issues.
“There is an urgent need for a common international definition of what constitutes as offshore financial centre, tax haven, secrecy haven, non-cooperative tax jurisdiction and high-risk country,” the Parliament said in its recommendation report to the European Council and European Commission.
The report added that “many loopholes still exist in the current legislation on tax evasion and anti-money laundering at the EU and national levels” and that “further strengthening of the legislation is needed”.
Among a range of measures, the Parliament said the Commission needs to launch a broad evaluation on harmful tax measures in member states and stop the use of any form of tax amnesties that can lead to money laundering and tax evasion.
It also called on the Commission to clarify what is illegal and what is legal, even if immoral, in the framework of tax evasion and tax avoidance.
Additionally, the report noted that wealth management remains largely unregulated and that binding international rules and standards should be set up to better regulate and define the profession.