THE 'Panama
Papers' revelations have shone the light on Panama’s culture and practice
of secrecy. OECD Secretary General Angel Gurria has said that Panama
is the last major holdout that continues to allow funds to be hidden offshore
from tax and law enforcement authorities. The OECD has been leading a global
crackdown on these practices since 2009, working hand-in-hand with the G20.
Through the Global Forum on Transparency and Exchange of Information, the
OECD has constantly and consistently warned of the risks of countries like
Panama failing to comply with the international tax transparency standards.
Just a few weeks ago, OECD told G20 Finance Ministers that Panama was back-tracking
on its commitment to automatic exchange of financial account information.
The consequences of Panama’s failure to meet the international tax transparency
standards are now out there in full public view. Panama must put its house
in order, by immediately implementing these standards.
While the “Panama Papers” data expose nefarious activities, they also show
a decline in the use of offshore companies and bearer share companies, which
is a testament to the incredible transformation effected in the last seven
years to establish robust international standards on tax transparency, including
on beneficial ownership: 132 jurisdictions have committed to the standard on
exchange of information ‘on request.’ Of those, 96 jurisdictions will introduce
automatic exchange of financial account information within the next 2 years.
Almost 100 jurisdictions have joined the Multilateral Convention on Mutual
Administrative Assistance in Tax Matters. As a result of in-depth peer review
process, the use of bearer share companies is close to being eliminated across
the world, and the beneficial ownership rules have been strengthened to ensure
that information is now available to tax authorities when they need it.
Establishing global standards and making commitments are just the start though.
Effective implementation is the key to lifting the veil of secrecy once and
for all and eradicating tax evasion. The time has come to make sure that no
jurisdiction can benefit from failing to meet their commitments.
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