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    Panama Probe Exposes 'Secrecy and Deceit' of Bankers, Lawyers, Accountants

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    An investigation into the Panama Papers tax avoidance scandal has exposed the deep chasm between EU policymakers and bankers, lawyers and accountants who create increasingly complex structures to reduce company tax liabilities, which Sputnik has been told amounts to "secrecy" and "deceit."

    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."

    However, the European Parliament's committee of inquiry into money laundering, tax avoidance and tax evasion (PANA) has exposed the staggeringly complex web of corporate structures that are being used to get round taxation rules within the EU — aggressive tax planning (ATP) — which have evaded the legislators.

    "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."

    ​"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.

    Related:

    Beyond Panama: Big Accountants, Banks, Law Firms in 'Systematic' Tax Ring
    EU Accused of 'Amnesia' in Backtrack Over Panama Papers Tax Register Response
    London Remains Capital of Corrupt Elite Despite Panama Papers Probe
    Panama Papers Six Months On: It's Still 'Business as Usual' in Tax Havens
    Tags:
    LuxLeaks, offshore tax havens, tax avoidance, Panama Papers, tax haven, International Consortium for Investigative Journalism, Tax Justice Network, European Parliament, European Union, Europe, Panama
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