The big social and traditional media repercussion of the ‘Panama Papers’ seems to have faded now.
Apart from the anecdotical British Virgin Islands’ Financial Service Commission (FSC) fine to the law firm Mossack Fonseca , only a few investigations triggered in the UK, France and Australia are still relevant.
It is true that the BEPS project of the OECD and the European Union, are giant steps to tackle tax fraud but unfortunately they only focus on the mechanics and the underlying issues are still unresolved. From an international legal perspective we believe that the principles of universal jurisdiction must be adopted to prevent international tax evasion and crime in general.
In fact there are four issues that, if addressed properly, may end with international tax avoidance.
- The lack of interest in the implementation of universal jurisdiction principles to international tax evasion does not allow to create an efficient and effective jurisdictional environment for states to prosecute tax evasion worldwide.
- The international lack of agreement on the legal meaning of “tax avoidance” effectively creates a limbo, which in reality becomes a virtual ‘tax haven’ for tax evaders. Tax evasion means different things in different jurisdictions.
- The lack of international regulations of the international tax profession. There is not an internationally agreed code of ethics and professional standards to regulate the international tax advisory profession worldwide. Therefore, virtually any professional can provide international tax advisory services.
- The progressive lack of independence of media outlets and investigative journalism which is too concerned with maintaining profitability at any costs, leaving aside social responsibility. As an example we can use the ‘Panama Papers’, where the viral impact was based on the celebrities involved and not in the substance of the cases presented. In fact, the majority of leaked documents were outdated and irrelevant from a legal point of view as it is demonstrated in the little legal impact they had.
There is lot of work to be done to fight tax evasion and it is not going to be possible unless the above issues are addressed by the public an private sector at national and international level.
The contribution of states and interstate organizations is paramount but they need to agree a list of priorities to be tackled, avoiding focusing just on the mechanisms of tax evasion and looking at the broad international legal environment where the tax fraudsters operate.