Panama Papers: a Focus on Tax Havens – What Is Still Legal and Which Instruments Prevent Misuse?

In April 2016 the “International Consortium of Investigative Journalists” published the so-called “Panama Papers,” giving insights into the system of tax havens and offshore companies. Alfons J. Weichenrieder, Goethe University of Frankfurt, sees higher political pressure on international tax havens. The focus is on the bilateral and multilateral exchange of information. It remains to be seen whether the information exchanged can actually be exploited. Friedrich Schneider, University of Linz, notes that although setting up an offshore company may officially be legal, such firms are often used for tax evasion or money laundering. It is important for countries like Panama to comply with international standards on the automatic exchange of information on bank accounts and with the money laundering guidelines already established in Europe. For Norbert Walter-Borjans, Finance Minister of North Rhine Westphalia, it is a question of supporting an international transparency standard and convincing negotiation partners who express reservations of its necessity. Michael Meister, State Secretary at the German Federal Ministry of Finance, also sees a greater degree of transparency as the key to solving the problem of the burgeoning use of offshore companies to veil financial circumstances. Lukas Hakelberg, European University Institute of Florence, and Thomas Rixen, University of Bamberg, supports market access restrictions as an instrument for combatting a lack of financial transparency, whereby the governments of major industrialised countries make access to their financial markets conditional to participation in transparency initiatives. For Jörg R. Werner, Frankfurt School of Finance & Management, one of the dangers of reform efforts is that sanctioning tax-saving models not only targets illegal tax evasion, but also legal tax avoidance.