One year ago this month, a staggering 11.5 million documents known as the Panama Papers were leaked, igniting a global debate around tax havens. The trove of documents implicated hundreds of wealthy public officials and private citizens from across the world in transferring funds to shell corporations, a kind of anonymously-owned offshore business entity. The Panama Papers revealed that law firm Mossack Fonesca, embroiled right in the center of the scandal, had used these offshore business entities to help their clients engage in a range of illicit activities, from money laundering to tax evasion to getting around sanctions. So, what’s happened a year on from the Panama Papers? And perhaps more importantly, what have we learned?
The Panama Papers did have a significant impact. To date, the leak has prompted over 150 official inquiries, audits, or investigations in 79 countries across the world. Moreover, there have been financial impacts. There were nearly 400 companies implicated in the Panama Papers, and an estimated $135 billion was wiped off the total value of these companies.
At a political level too, the Panama Papers proved to be impactful. A number of government and public officials were implicated in the scandal, which reverberated throughout the world of geopolitics. Iceland’s Prime Minister, for example, was forced to resign after the leak showed his family had stashed away assets offshore, while political figures like British Prime Minister David Cameron, Australian Prime Minister Malcolm Turnbull, and Argentinean President Mauricio Macri all faced scrutiny after they were named in the papers.
But in spite of the sheer magnitude of the leak and the impacts of the relegations, the Panama Papers haven’t succeeded in driving change. Perhaps most notably, while a number of governments clamored to call for action against global tax havens, there has been remarkably little progress on this. All in all, in spite of outrage around the use of shell corporations, there hasn’t been much of a crackdown on them from global governments. In fact, in the United States, it is still legal and completely permissible for corporations to be anonymously owned. Similarly, the EU has struggled to get legislation and policy in place to address the issues around global tax havens.
The bottom line is that in spite of the Panama Papers, it would appear that a year later, not many lessons have been learned. In spite of the papers’ impact, the world hasn’t seen major reform to the global tax system, and it does not seem likely that it will witness such reform anytime soon.
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