The leaders of the International Monetary Fund (IMF) and the World Bank have warned that the large scale of international tax avoidance revealed by the Panama Papers represents a “great concern” for the global economy and is having a “tremendously negative effect on our mission to end poverty”.
Christine Lagarde, the managing director of the IMF, said the Panama Papers, an unprecedented leak of 11.5 million files from offshore law firm Mossack Fonseca, showed that the international tax rules appear to be skewed towards the global rich.
“Clearly what has resulted from the review of these Panama Papers indicates that however important [international tax rules to prevent] base erosion and profit shifting … it is unfinished business,” she said in an opening address to the meeting.
Lagarde said more global cooperation is needed to stop tax avoidance and to ensure “the net does not have little loopholes here and there”.
“A lot of things have gone global but there is one thing that has not gone global and that is tax. It is still very much a local affair,” she said adding that “international cooperation really has to be significantly improved and we are happy to play our part.”
The President of the World Bank, Jim Yong Kim, said the revelations that many of the world’s richest and most powerful people are avoiding paying millions in taxes by hiding money from the taxman in offshore havens is a “great, great concern” and “very, very damaging” to the bank’s “mission to end extreme poverty”.
“When taxes are evaded, when state assets are taken and put into these havens, all of these things can have a tremendous negative effect on our mission to end poverty and boost prosperity,” Kim said as he opened the Spring Meetings of the World Bank and IMF in Washington.
The Panama Papers fallout has forced the EU to target tax havens used by big firms with new tax rules.