The Panama Papers affair began with the leak, by the International Consortium for Investigative Journalism, of 11.5 million confidential documents that provided detailed information about more than 214,000 offshore companies listed by the Panamanian corporate service provider Mossack Fonseca, including the identities of shareholders and directors of the companies.
The documents show how wealthy individuals, including public officials, hide their money from public scrutiny.
It led to the European Commission calling for a crackdown on secrecy and the establishment of "fairer, more transparent and more effective taxation" and the "strengthening the cooperation between fiscal authorities across the EU."
Role of lawyers, bankers, accountants in #PanamaPapers: #PANA committee’s hearing live at 8:00 → https://t.co/U17HEa8S0c pic.twitter.com/EYR3BHPGQp
— EPinIreland (@EPinIreland) 9 February 2017
"The EU is confronted with a situation where bankers, lawyers and accountants are creating highly complex, bespoke structures to undermine EU laws. Certainly, any normal person would find the complexity extraordinary," John Christensen from the Tax Justice Network told Sputnik.
"Complexity in the context is another form of secrecy. It's a way of impeding investigation and I think it's only now beginning to dawn on European policymakers that this complexity is deliberate and its purpose is intended to block investigation and form mechanisms of deceit," Christensen added.
Aggressive Tax Planning
During a public hearing on the role of lawyers, accountants and bankers in the Panama Papers, one of the committee members asked for a definition of "aggressive tax planning."
#PanamaPapers | Backdated documents made for companies to evade tax, yet nothing illegal happened? How can it be? Asks @JeppeKofod in PANA pic.twitter.com/GHDWQnAyrD
— S&D Group (@TheProgressives) 9 February 2017
"I think there is an OECD [Organization for Economic Co-operation and Development] definition, but that's not embedded in law anywhere. The things that we are looking at are the complexities of the layers in the structure [of a corporate entity]. Is there an asymmetry in the tax flows between the structure? But most importantly: the question of corporate structure," said Matthew Elderfield, Head of Group Compliance at the Swedish-based Nordea Bank, which was named in the Panama Papers.
"So, what is a substantive corporate structure and what is not a substantive corporate structure? Is it merely: do they have a board [of directors]? Do the directors meet every year? Are the accounts filed in the jurisdiction? Do the directors have 11,000 directorships? This is an area where policy-makers have struggled to define what corporate substance is," he told the committee.
