Recently, we saw one of the biggest financial leaks to date. The so-called “Panama Papers” are a collection of financial data taken directly from the database of Panama-based law firm Mossack Fonseca & co. Fonseca is a long-standing expert in setting up offshore companies most notably in the British Virgin Isles, Cyprus, etc. They are the fourth biggest service provider in terms of creating offshore corporations.
The documents reveal a network of businesses and people that are clients with Mossack Fonseca. The law firm is an international expert in setting up offshore companies which clients use to funnel funds and effectively avoid taxation. The sheer size of the leak is absolutely enormous. According to the guardian the total size is 2.6 terabytes of information which translates to roughly 11.5 million documents. The sheer scope of information is larger than what was previously leaked by Edward Snowden in 2013 and WikiLeaks in 2010.
The people involved are active in a variety of sectors, ranging from politicians to artists, directors and musicians. Most notably these people include the British Prime Minister David Cameron, Russian president Vladimir Putin, FIFA president Gianni Infantino, Ukrainian president Petro Poroshenko, European Commissioner Cañete, Spanish Minister for Industry José Soria, Icelandic Prime Minister Sigmundur Gunnlaugsson and many more. The list of people and companies involved continues to grow as more of the documents are being investigated.
Mossack Fonseca itself denies any wrongdoing, defends its practices and refuses to specify or discuss any individual case.
Recently, the Greens have released a report on the tax evasion tactics of IKEA, the leak of the Panama Papers goes to show – once more – the magnitude of the actual problem. The people and organisations involved in these practices aren’t doing anything illegal. The use of offshore structures is legal, although it does remain in a grey area. The Greens in the European Parliament have already called for public country by country reporting to ensure clarity on taxation. By doing this, we can see where companies earn their money and where they pay their taxes, which will in turn increase transparency.
We’ve always been very clear of the fact that everyone should pay their fair share. While large corporations and the upper financial echelons receive tax deals and may set up offshore evasive structures, the medium and low income groups get the short end of the stick. A common European approach to corporate and wealth taxation is a necessity in order to effectively hit a fair balance of taxation in Europe.
The Greens in the European Parliament recently launched a petition aimed at the President of the European Commission Jean-Claude Juncker to put a stop to these practices. They demand the EU institutions to prosecute the financial institutions that let their clients hide their assets in tax havens and those who do not report suspected European citizens to tax authorities. At the time of this writing the petition has already gathered over 400.000 signatures. Furthermore, the Greens are working on an attempt to set up an Inquiry Committee to take a closer look at the problem.