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Republic of Panama-The geographical (National Geographic, 2011) Historically, prior to the arrival of Spanish settlers in the 16 th century, Panama was inhabited by numerous aboriginal tribes. Later on, Panama remained under Spanish control for over 300 years before attaining independence in 1821 and subsequently joined Republic of Gran Columbia, a union of Ecuador, Nueva Granada and Venezuela. Panama and Nueva Granada remained together as Republic of Columbia, following the dissolution of Gran Colombia in 1831. In 1903, backed by United States, Panama seceded from the Republic which was followed by construction of the famous Panama Canal undertaken and completed by the U.S. Army Corps of Engineers in 1914. Furthermore, in 1977, the Torrijos-Carter Treaty was signed between the governments of Panama and U.S. for transferring canal control w.e.f. December 31 st , 1999 after 85 years of U.S. control (CIA's World Fact book, 2010). The revenue proceeds from the canal contribute a major portion to the country's GDP. Additionally, its sophisticated service sector especially banking, commerce and tourism and trade has also seen tremendous growth in recent years. On the United Nations' Human development Index, Panama was ranked 60 th in 2015 (UNDP, 2015). In 2010, Panama was adjudged Latin America's 2 nd most competitive and progressive economy in the Global Competitiveness Index (World Economic Forum). Almost 40% of Panama's land area is covered by tropical forests which are home to a
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The Panama Papers, or as they are commonly called the Panama Leaks, are around 12 million documents that contain vastly discrete financial and attorney-client information, dating back to early 1970s, of about 215,000 offshore corporations created by Mossack Fonseca, a Panama-based corporate law firm, for their various clients worldwide. The said do...
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... This is said to have created opportunities for businesses to take advantage of existing legal vacuums between nation states through the use of mainly OFCs to carry out aggressive tax avoidance schemes including transfer pricing, re-invoicing, thin capitalization, special purpose vehicles, corporate inversions and the use of suspicious foundations, trusts and charitable entities (Christensen and Kapoor 2004). The Panama Papers highlighted the manipulative tax schemes and consequential damages to developing countries as well as to their domestic resources (Zaidi et al. 2017). The global money laundering and tax evasion schemes that were revealed as a result of the leak of the Panama Papers have led to mounting pressure surrounding mainly OFCs and brought to the forefront the urgent need to enhance transparency and due diligence (Zaidi et al. 2017). ...
... The Panama Papers highlighted the manipulative tax schemes and consequential damages to developing countries as well as to their domestic resources (Zaidi et al. 2017). The global money laundering and tax evasion schemes that were revealed as a result of the leak of the Panama Papers have led to mounting pressure surrounding mainly OFCs and brought to the forefront the urgent need to enhance transparency and due diligence (Zaidi et al. 2017). ...
This chapter is the introduction to the book. It discusses the emergence of offshore financial centres in the Caribbean and their proliferation as a result of globalization. It looks at the effects of globalization which have given rise to money laundering, terrorist financing and tax evasion, and the increasing concerns of the international community to find solutions to these phenomena, including the creation of the FATF and the assignment of the OECD with the responsibility to counter these three phenomena respectively.
... It was also estimated that each year around £16.5 billion left the Russian economy in capital flight (The Times, June 9, 2000 as cited in Sikka 2003), and per the US Treasury, in 1998 approximately $70 billion was moved out of Russia to offshore accounts located in Nauru, a country with a population of 10,000 and 400 banks (Sikka 2003). Further, findings from the Panama papers indicated that an estimated US$2.1 trillion was stashed away overseas by American companies to avoid paying taxes (Bloomberg 2015 as cited in Zaidi et al. 2017). Due to what was viewed as promoting the capital flight and tax avoidance, offshore tax havens were positioned as jurisdictions which encouraged economic underdevelopment (Sikka 2003). ...
... Based on the findings coming out of the Panama Papers by the International Consortium of Investigative Journalists (ICIJ), the majority of the offshore companies which were incorporated by Mossack Fonseca on behalf of their respective clients were presumably for illegal purposes such as financial fraud, money laundering, tax evasion, averting international sanctions, and kleptocracy (Christensen and Kapoor 2004). ICIJ also found that shell companies were used not only by rich individuals, their relatives and associates, but also by public officials including several present and former presidents, their relatives and associates, as well as business tycoons, celebrities, and government bureaucrats from over 40 countries worldwide (Zaidi et al. 2017). The Panama Papers also revealed startling information concerning money laundering and tax evasion on a global scale by a number of the most influential and powerful people in the world, which led to the resignations to many world leaders, including Sigmundur Davíð Gunnlaugsson, former Prime Minister of Iceland, Mauricio Macri, ex-president of Argentina, and Nawaz Sharif, former Prime Minister of Pakistan (Zaidi et al. 2017). ...
... ICIJ also found that shell companies were used not only by rich individuals, their relatives and associates, but also by public officials including several present and former presidents, their relatives and associates, as well as business tycoons, celebrities, and government bureaucrats from over 40 countries worldwide (Zaidi et al. 2017). The Panama Papers also revealed startling information concerning money laundering and tax evasion on a global scale by a number of the most influential and powerful people in the world, which led to the resignations to many world leaders, including Sigmundur Davíð Gunnlaugsson, former Prime Minister of Iceland, Mauricio Macri, ex-president of Argentina, and Nawaz Sharif, former Prime Minister of Pakistan (Zaidi et al. 2017). ...
This chapter examines tax evasion and the factors which facilitate it. It also looks at the challenges faced by tax authorities in jurisdictions to collect taxes, and the challenges associated with this phenomenon. This chapter also explores the incentives which contributed to pushing the agenda forward in the international arena to address the problem of tax evasion and discusses the organization and specific countries which took on the responsibility to deal with this issue, along with the tools implemented by each to combat this problem.
