Panama signs up to OECD anti-tax avoidance agreement

11 May 16

Panama has agreed to share its financial account information automatically in order to tackle tax evasion and avoidance.

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Panama City, Panama

Panama City, Panama. A recent leak of a trove of documents from Panamanian law firm Mossack Fonseca revealed how the world's rich and powerful use tax havens to shirk their dues, putting tax avoidance high on the agenda.

 

The OECD announced today that the central American nation, a well-known tax haven, has signed up to global agreements to increased transparency.

The news comes just over a month after the small country found itself at the centre of a global scandal after a trove of 11.5 million documents leaked from Panama-based law firm Mossack Fonseca revealed how the world’s rich and powerful have been dodging their tax bills.

With tax evasion and avoidance on the global agenda, OECD secretary Angel Gurría, said the world is now seeing an “unstoppable movement” towards information sharing. 

The OECD also announced that Bahrain, Lebanon and Vanuatu have now committed to automatically exchanging information, bringing the total countries subscribed to the plan to 101.

It will see the tax authorities in participating countries automatically share the information they collect on taxpayers in their jurisdiction with others around the world.

This new level of transparency will make it more difficult for those looking to exploit loopholes in cross-border laws to shirk their dues.

But Gurría said it is important now that these political commitments are turned into practical reality through implementation.

“Actions must now speak louder than words,” he said, urging all countries that have not done so to sign up to the agreements.

Unlike Panama, some of the world’s most popular tax havens have so far refused to participate in such global initiatives.

British overseas territories, including the British Virgin Islands and the Cayman Islands, the first of which was the most frequently used by Mossack Fonseca’s clients, are among those that do not want to take part.

This has been a source of much embarrassment for UK prime minister David Cameron, who is hosting a global Anti-Corruption Summit in London tomorrow to tackle this exact issue and who wants to portray Britain as at the forefront in the fight against tax avoidance and cross-border corruption.

The United States has also been reluctant to take part in global efforts to end tax avoidance. The country is currently ranked third in the world for the level of financial secrecy it offers, according to the Financial Secrecy Index.

For those jurisdictions that have signed up, the exchange of information will begin either next year or in 2018. 

 

  • Emma Rumney

    Emma is a reporter at Cooking Recipes International. She also writes for in the UK.

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