Daily Management Review

Crackdown on International Tax Evasion Launched in US following Panama Papers


05/06/2016




Crackdown on International Tax Evasion Launched in US following Panama Papers
In response to recent disclosures in the Panama Papers revealing the scale of offshore financial activity, US President Barack Obama is launching a crackdown on international tax evasion.
 
The US president will take executive action to close loopholes used by foreigners in the US and call on Congress to pass legislation in a series of initiatives, announced the White House very recently.
 
The package of measures are among the most comprehensive response yet to the Panama Papers revelations though the later steps may hit political obstacles in an election year. The Panama Papers revelations were , disclosed by a consortium of international journalists including The Guardian.

“In recent weeks, the disclosure of the so-called ‘Panama Papers’ – millions of leaked documents reportedly revealing the use of anonymous offshore shell companies – has brought the issues of illicit financial activity and tax evasion into the spotlight. The Panama Papers underscore the importance of the efforts the United States has taken domestically, and the efforts we have undertaken with our international partners, to address these shared challenges,” said the White House in a statement.
 
Earlier Obama was one of the first world leaders to respond to the record-breaking leak last month. He is also under pressure to limit the flow of corporate money out of the US.
 
“There is no doubt that the problem of global tax avoidance generally is a huge problem. The problem is that a lot of this stuff is legal, not illegal,” Obama told reporters in an unscheduled appearance last month.
 
The initial package of measures outlined by the White House this week would focus largely on increasing transparency regulations as a tool to flush further offshore tax abuses into the open even though they may not go as far as some campaigners wish.
 
These measures include:
 
Tighter transparency rules to enable immediate executive action to combat money laundering, terrorist financing, and tax evasion
 
A loophole allowing foreigners to hide financial activity behind anonymous entities in the US to be closed with new treasury rules
 
For banks handling money of behalf of clients, enforcement of stricter “customer due diligence” rules
  
To enable to more directly tackle the problem of offshore tax avoidance in the longer run, the White House and Treasury also called on Congress to pass a series of detailed measures.
 
New Treasury rule could make it easier to hide money in the US, critics say
 
US Treasury is re-examining its policies on shell companies but experts say rule is too broad to discourage tax avoidance in the wake of Panama Papers revelations.
 
“The treasury department has long focused on countering money laundering and corruption, cracking down on tax evasion, and hindering those looking to circumvent our sanctions. Building on years of important work with stakeholders, the actions we are finalizing today mark a significant step forward to increase transparency and to prevent abusive conduct within the financial system,” said treasury secretary Jack Lew in a statement.
 
(Source:www.theguardian.com)






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