In the aftermath of the global tax evasion scandal known as the “Panama Papers,” the European Commission has proposed sweeping new changes to the reporting and disclosure requirements for corporations doing business throughout the twenty-eight European Union member countries. While the use of offshore entities is not illegal, utilizing them to breach tax laws is. The disclosures gleaned from the massive leak of confidential information from a leading Panamanian law firm revealed a scope—in dollar amounts and number of entities and world figures involved—which was previously unheard of. The resulting media clamor left the EU little choice but to come down hard and fast.
The Panamanian Epicenter
In early 2015, an anonymous whistleblower leaked over eleven million documents from a Panamanian law firm to a German newspaper, which then organized a team of four hundred investigative journalists to conduct in-depth research and document review. Fourteen months later, the investigative consortium exposed the use of 214,000 offshore companies set up in Panama, the British Virgin Islands, Hong Kong, and elsewhere by account holders and offshore operators, ranging from five heads of state to numerous high government officials and managers of multinational companies.