UN, IMF, World Bank, and OECD Join Forces in Wake of Panama Papers

Several of the world’s leading international economic organizations announced on Tuesday that they would join forces to confront the various tax issues illuminated by the recent Panama Papers scandal. These organizations include the United Nations (UN), the International Monetary Fund (IMF), and the World Bank, the Organization for Economic Cooperation and Development (OECD), among others.

They will develop new processes, tools, strategies, and standards designed to halt tax base erosion and prevent tax evasion by individuals and corporations.

The new conglomeration will focus particularly on developing economies, as they may be most prone to the temptations of functioning as tax havens. This is what occurred in Panama, where wealthy individuals and corporations from around the world funneled assets through a law firm to avoid paying taxes in their home country.

The information of the financial wrongdoing was uncovered by hackers who posted millions of pages of documents pilfered from the servers of the Panamanian law firm on the Internet (i.e., the so-called “Panama Papers”).

While the Panama Papers sparked international outrage, and set off more than a few scandals around the world, the U.S. Treasury Department Deputy Assistant Secretary, Robert Stack, sees it as an opportunity. In a statement on Tuesday, he credited the Panama Papers with creating an opportunity to break down the walls of secrecy surrounding many of these known, but rarely challenged, tax haven nations.

"I don't think one could underestimate the at least short-term impact that the release of the Panama Papers has on the issue of transparency," Stack said. He did call, however, the United States’ own position “funny” when it comes to criticizing Panama, given its own lack of transparency.

The IMF and World Bank conducted a spring meeting last week in Washington at which – not surprisingly – the issue of the Panama Papers and financial transparency figured prominently. The two organizations pledged to take steps against tax evasion and base erosion. They saw one of the best ways to do this as fighting tax law mismatches through the sharing of tax information between nations.

Similarly, the Group of 20 (G20) also came together last week to discuss these issues. That meeting resulted in a promise to penalize nations that fail to cooperate in tax information sharing initiatives by implementing “defensive measures.” What those measures may be was not specified.