The chief of the OECD said Monday that the Panamanian government is expected to cooperate in international efforts to prevent tax avoidance after the revelation of the Panama Papers.
OECD Secretary-General Angel Gurria said during a news conference in Tokyo that the vice president of Panama, Isabel de Saint Malo, told him last week her government “is willing to cooperate fully with the OECD.”
Although Panama has not joined the initiative to have participating countries exchange information on financial accounts, Gurria said “my expectation is that this very unfortunate event may trigger a reaction by the government of Panama to fully join the rest of the world in this exercise about transparency.”
The issue of tax avoidance has taken center stage as leaked internal files from a Panama-based law firm that specializes in setting up shell companies point to wealthy clients hiding assets through offshore tax havens.
The Paris-based organization plans to convene a special meeting Wednesday to explore the possibilities of cooperation and information-sharing.
The Group of 20 economies, which have approved the OECD-led initiative, are also expected to take up the issue at a two-day meeting starting Thursday in Washington.
The Panama Papers revelation came as the OECD has taken the initiative to allow nearly 100 countries and regions to exchange nonresident financial account information with tax authorities in the account holders’ country of residence, starting next year.
“I think this event will help us to understand that the move toward transparency is not going to stop, that there is no reverse,” Gurria said.
The OECD is also working out how to impose tougher international tax rules to prevent corporate tax avoidance by multinational enterprises.
Meanwhile, Gurria urged Japan to raise the consumption tax to 10 percent from the current 8 percent in April 2017 as planned, calling the commitment of Prime Minister Shinzo Abe “reassuring,” after submitting the organization’s policy proposals.
“You are talking about catching up,” Gurria said, pointing to the average of value-added tax of OECD countries standing at 20 percent, and Japan has more room to increase the consumption tax rate above 10 percent to pursue fiscal sustainability.
Gurria, who met with Finance Minister Taro Aso earlier Monday, is likely to present his views at an economic and finance meeting with the prime minister on Wednesday.
Abe has said he plans to raise the consumption tax as scheduled unless there is a major economic shock on the scale of the collapse of Lehman Brothers or a major earthquake.
But gloomier prospects for the world economy amid a slowdown in the Chinese and other emerging economies have fueled speculation Abe could be forced to delay the tax hike, which is likely to weigh on already sluggish private consumption.
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