The massive data leak under the Panama Papers has caused massive uproar and alarm among nations, particularly in Europe where several leaders and personalities are involved. In response to the crisis, the European Union has threatened to impose sanctions against Panama and other tax havens if they refuse to cooperate with investigations on money laundering and tax evasion cases.
In response to the Panama leaks, an EU executive suggested that member states should compile a common list of tax havens that hide EU-taxable revenues and that a corresponding penalty should be imposed.
"We need now a true European list of non-cooperative jurisdictions," EU tax and economics commissioner Pierre Moscovici said, as quoted by Straits Times. "I want this list of tax havens in the next six months at the latest."
Tax-related legislative proposals, however, face challenges in the EU where members are have opposing interests. A unanimous vote from 28 EU states is needed for a bill to be passed into law.
Moscovici further commented that the offshore companies have hidden "shocking amounts" amounting to an estimated annual loss of some €1 trillion in public money.
The European Commission has reportedly begun devising a mechanism to tighten tax regulations across the union and the Panama Papers is perceived as a possible prompt that would bolster action.
An effort to fix loopholes is already underway, Moscovici said. According to Politico, the EU has adopted an automatic exchange of tax deals between countries and companies. An automatic system for sharing firms' tax data is also being developed.
Moscovici and Financial Services Commissioner Jonathan Hill is set to introduce a proposal next week that will urge companies operating within European Union borders to disclose tax information per country.
CBC reported that the Panama leaks unleashed 11.5 million documents from law firm Mossack Fonseca. The documents show that the firm facilitated the creation of shell companies and offshore accounts for clients to hide their wealth.
The scandal has pushed Iceland's prime minister to step down from office.
Vladimir Putin, another name involved in the scandal, denied any linkage to offshore accounts and accused the Panama Papers as part of a US-led smear campaign to weaken Russia.
