In the wake of the Panama papers, the UK revenue collection agency (HMRC) is consulting on a possible corporate offence of failure to prevent the criminal facilitation of tax evasion.
One immediate problem I foresee is the offence’s remoteness from the actual harm. The corporate body is not being charged as the principal offender (the person who evades the taxes), nor is it being tried as a secondary party/accessory (the person who aids, abets, procures, counsels or ‘facilitates’ the offence). Instead the body is liable for failing to prevent an accessory from helping another to evade taxes! The corporate body is literally a third party to the offence. Furthermore, ‘failure to act’ considerably expands the scope of liability because there are usually many more ways to fail at doing something than there are to actually do it. In other words the intrusion of the criminal law is often more heavy-handing in crimes of omission than in crimes of commission
This writer argues that the blockchain ledger system could boost transparency in record-keeping and transactions in a way that prevents the tax and fraud abuses highlighted in the Panama papers.
This writer discusses discouraging offshore tax evasion by imposing an elaborate ‘hidden wealth’ tax. But as he notes, it would require exceptional global cooperation. Perhaps marrying this idea to the blockchain idea (above) for transparency’s sake would make it more feasible?
On the other hand, there are those who believe the Panama papers make the case for regulating bitcoin more pressing.
Amitabh Bachchan (the Big B) has seen his reputation somewhat tarnished by being named in the Panama papers. Certainly, if it’s true that he is a ‘Caribbean tax tourist’, this may make him unpalatable as ambassador for Indian tourism.
Is the reason the Panama papers didn’t make a splash in Africa due to African being inured to corruption and dodgy tax schemes? Or is it that there is some sympathy with those who chose not to keep all their wealth African countries that are too often poorly run, kleptocratic or repressive? But if so, why keep the wealth itself a secret?
It’s certainly troubling that Kenyan Deputy Chief Justice Kalpana Rawal was named in the Panama papers along with her husband– as the Daily Nation asks: was DCJ Rawal open about her links with Mossack Fonseca’s creations when she declared her wealth during her career and during her interview to be DCJ?
If you want a list of other senior Africans named in the Panama papers you can check out the ANCIR investigative centre.
Finally like a stern priest to a wayward member of her flock, the IRS has warned Americans who might be in the Panama papers that they can expect no absolution without confession. In the words of the article the IRS has said to any Americans involved: “‘fess up before we finish reading the Panama papers”. Even though few Americans have been named thus far as directly involved in Mossack Fonseca’s shadiness, one must remember that they may also be indirectly implicated as accessories who helped foreigners evade taxes.