The European Parliament Conference of Presidents unanimously backed setting up a committee to investigate the so-called “Panama Papers.”

More than 11 million documents from a Panamanian law firm were leaked to a German newspaper and subsequently shared with more than 100 other international news outlets, including the International Consortium of Investigative Journalists (ICIJ). The documents allegedly reveal how the world’s politicians and other powerful figures hide their assets offshore and evade taxes. The law firm has denied any wrongdoing.

After the leak, the ICIJ collaborated with other media outlets, spending a year sifting through the leaked files that included emails, financial spreadsheets, passports, and corporate records. The documents revealed the names of the secret owners of bank accounts and companies in 21 offshore jurisdictions.

“I think the leak will prove to be probably the biggest blow the offshore world has ever taken because of the extent of the documents,” said ICIJ director Gerard Ryle. The leak put the spotlight on tax evasion by world leaders, from friends of Russian President Vladimir Putin to relatives of the prime ministers of Britain, Iceland and Pakistan, as well as the president of Ukraine.

On April 12, the European Parliament hosted a meeting with European Taxation Commissioner Pierre Moscovici to discuss those revelations. Some members of parliament called for additional measures to fight tax fraud, tax evasion, and money laundering in the European Union (EU).

Following one suggestion, the parliament decided to set up a committee to investigate the Panama Papers. The resulting committee is required to report back to Parliament within 12 months, although Parliament can extend the period of inquiry.

Next steps

The full scope of the inquiry into the use of offshore shell companies will not be determined until a European Parliament vote scheduled for May 4.

Separately, on April 13, in light of the Panama Papers revelations, the Organisation for Economic Co-operation and Development (OECD) convened a special project meeting of the Joint International Tax Shelter Information and Collaboration (JITSIC) Network to explore possibilities of cooperation and information-sharing, identify tax compliance risks, and agree on collaborative action. The meeting brought together senior tax officials from a number of countries, including members of the OECD and G20.

© 2016