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| Obama calls for international tax reform amid Panama Papers revelations | |
| (35 minutes later) | |
| Barack Obama has called for international tax reform in the wake of the revelations contained in the Panama Papers. | |
| “There is no doubt that the problem of global tax avoidance generally is a huge problem,” he told reporters at the White House on Tuesday. “The problem is that a lot of this stuff is legal, not illegal.”The US president said the leak from Panama illustrated the scale of tax avoidance involving Fortune 500 companies and running into trillions of dollars worldwide. | |
| “We shouldn’t make it legal to engage in transactions just to avoid taxes,” he added, praising instead “the basic principle of making sure everyone pays their fair share”. | |
| Obama spoke in favour of his administration’s new rules to close corporate inversions, by which companies move overseas to avoid taxes. He described the practice as ”one of the most insidious tax loopholes out there”. | |
| His unscripted remarks came as he made a rare and unscheduled appearance in the White House press briefing room and follows confirmation that US authorities are reviewing an international offshore law firm, exposed for helping the wealthy and powerful avoid US sanctions against regimes in Syria, North Korea, Russia and Iran. | |
| Obama administration officials confirmed that they are examining reports based on the leak of millions of documents from Panama-based law firm Mossack Fonseca that were given to the International Consortium of Investigative Journalists (ICIJ) and a large network of international partners, including the Guardian and the BBC. | |
| “We are aware of the reports and are reviewing them. While we cannot comment on the specifics of these alleged documents, the US Department of Justice takes very seriously all credible allegations of high-level, foreign corruption that might have a link to the United States or the US financial system,” said Peter Carr, spokesman for the DoJ. | |
| The White House spokesman, Josh Earnest, said in remarks on Monday there “should be greater transparency in international financial transactions”. | |
| High-end property sales linked to offshore accounts are likely to be one area of interest for US authorities. The documents link offshore accounts to buyers of high-priced property in Miami, one of a number of cities to have experienced a property boom fuelled by buyers with offshore accounts. | High-end property sales linked to offshore accounts are likely to be one area of interest for US authorities. The documents link offshore accounts to buyers of high-priced property in Miami, one of a number of cities to have experienced a property boom fuelled by buyers with offshore accounts. |
| The papers link one $3m cash purchase of a Miami apartment to Paulo Octávio Alves Pereira, a Brazilian developer and politician now under indictment for corruption in his home country. | The papers link one $3m cash purchase of a Miami apartment to Paulo Octávio Alves Pereira, a Brazilian developer and politician now under indictment for corruption in his home country. |
| Earlier this year federal agents announced a crackdown on corrupt foreign officials and criminals snapping up high-priced real estate in the US in cities including Miami and New York. | Earlier this year federal agents announced a crackdown on corrupt foreign officials and criminals snapping up high-priced real estate in the US in cities including Miami and New York. |
| Mossack Fonseca has operations in Nevada, the Guardian can disclose, which could create another area of difficulty for the firm. According to the leaked papers Mossack Fonseca’s employees attempted to “obscure” documents and “clean” computer logs after it was issued a subpoena by a federal court in Las Vegas. | Mossack Fonseca has operations in Nevada, the Guardian can disclose, which could create another area of difficulty for the firm. According to the leaked papers Mossack Fonseca’s employees attempted to “obscure” documents and “clean” computer logs after it was issued a subpoena by a federal court in Las Vegas. |
| Internal emails show that a Mossack Fonseca employee travelled from Panama to the Nevada office. “When Andrés came to Nevada he cleaned up everything and brought all documents to Panama,” reads a 24 September 2014 email. | Internal emails show that a Mossack Fonseca employee travelled from Panama to the Nevada office. “When Andrés came to Nevada he cleaned up everything and brought all documents to Panama,” reads a 24 September 2014 email. |
| Another email from 2014 said it was important that any links between the company’s computers in Panama and Nevada “has to be obscure to the investigators”. | Another email from 2014 said it was important that any links between the company’s computers in Panama and Nevada “has to be obscure to the investigators”. |
| The destruction of documents with the intent to impede or obstruct an investigation is a crime punishable by up to 20 years in jail under US law. | The destruction of documents with the intent to impede or obstruct an investigation is a crime punishable by up to 20 years in jail under US law. |
| Mossack Fonseca said it “categorically” denied destroying any documents. “Let us be clear that it is not our policy to hide or destroy documentation that may be of use in any ongoing investigation or proceeding,” a spokesman for the company said. | Mossack Fonseca said it “categorically” denied destroying any documents. “Let us be clear that it is not our policy to hide or destroy documentation that may be of use in any ongoing investigation or proceeding,” a spokesman for the company said. |
| Eric LeCompte, executive director of the Jubilee USA Network, a Washington-based faith advocacy group, said: “These actions demonstrate how important this leak is and how many people desperately wanted to stop it from coming to light. Nevada is a hub for financial secrecy in the United States. Nevada-based shell companies have been used to scam US military personnel, churchgoers and the elderly. The US must pass legislation that shines a light on these secretive shell companies.” | Eric LeCompte, executive director of the Jubilee USA Network, a Washington-based faith advocacy group, said: “These actions demonstrate how important this leak is and how many people desperately wanted to stop it from coming to light. Nevada is a hub for financial secrecy in the United States. Nevada-based shell companies have been used to scam US military personnel, churchgoers and the elderly. The US must pass legislation that shines a light on these secretive shell companies.” |
| Another leaked email from a Mossack Fonseca partner said: “Ninety-five percent of our work coincidentally consists of selling vehicles to avoid taxes.” The company denies any wrongdoing. The creation and use of an offshore company to avoid tax is not against the law. | Another leaked email from a Mossack Fonseca partner said: “Ninety-five percent of our work coincidentally consists of selling vehicles to avoid taxes.” The company denies any wrongdoing. The creation and use of an offshore company to avoid tax is not against the law. |
| The revelation that a company engaged in industrial-scale offshore tax avoidance, even on US soil, comes after Barack Obama has repeatedly spoken out against companies and the super-rich exploiting the US tax code.. | The revelation that a company engaged in industrial-scale offshore tax avoidance, even on US soil, comes after Barack Obama has repeatedly spoken out against companies and the super-rich exploiting the US tax code.. |
| Soon after he took office in 2009, Obama outlined plans to crack down on offshore tax havens and return more than $200bn in unpaid taxes to the US. “I want to see our companies remain the most competitive in the world. But the way to make sure that happens is not to reward our companies for moving jobs off our shores or transferring profits to overseas tax havens,” he said. However, eight years on little has changed and indeed the US itself has emerged as a popular venue for tax avoidance. | Soon after he took office in 2009, Obama outlined plans to crack down on offshore tax havens and return more than $200bn in unpaid taxes to the US. “I want to see our companies remain the most competitive in the world. But the way to make sure that happens is not to reward our companies for moving jobs off our shores or transferring profits to overseas tax havens,” he said. However, eight years on little has changed and indeed the US itself has emerged as a popular venue for tax avoidance. |
| The US states of Nevada, Wyoming and South Dakota have been promoted as new hot markets to avoid tax and stash cash secretly, because the US has been resisting international disclosure reforms. Last year the Tax Justice Network, an activist research group, ranked the US third in its annual financial secrecy index citing its “wide array of secrecy and tax-free facilities for non-residents”. | The US states of Nevada, Wyoming and South Dakota have been promoted as new hot markets to avoid tax and stash cash secretly, because the US has been resisting international disclosure reforms. Last year the Tax Justice Network, an activist research group, ranked the US third in its annual financial secrecy index citing its “wide array of secrecy and tax-free facilities for non-residents”. |
| “How ironic – no, how perverse – that the USA, which has been so sanctimonious in its condemnation of Swiss banks, has become the banking secrecy jurisdiction du jour,” Peter Cotorceanu, a lawyer at Swiss law firm Anaford AG said in a recent legal journal, according to Bloomberg. “That ‘giant sucking sound’ you hear? It is the sound of money rushing to the USA.” | “How ironic – no, how perverse – that the USA, which has been so sanctimonious in its condemnation of Swiss banks, has become the banking secrecy jurisdiction du jour,” Peter Cotorceanu, a lawyer at Swiss law firm Anaford AG said in a recent legal journal, according to Bloomberg. “That ‘giant sucking sound’ you hear? It is the sound of money rushing to the USA.” |
| Among the revelations contained in the leak of 11.5m Mossack Fonseca files are the financial dealings of Putin; Pakistan’s prime minister, Nawaz Sharif; Ayad Allawi, former vice-president of Iraq; Petro Poroshenko, president of Ukraine; Alaa Mubarak, son of Egypt’s former president; and the prime minister of Iceland, Sigumundur Davíð Gunnlaugsson. | Among the revelations contained in the leak of 11.5m Mossack Fonseca files are the financial dealings of Putin; Pakistan’s prime minister, Nawaz Sharif; Ayad Allawi, former vice-president of Iraq; Petro Poroshenko, president of Ukraine; Alaa Mubarak, son of Egypt’s former president; and the prime minister of Iceland, Sigumundur Davíð Gunnlaugsson. |