Professor Ronen Palan discusses Panama Papers and possible solutions to tax avoidance.
Published (Updated )
A tax haven expert from City, University of London has given a presentation at the European Parliament.
Professor Ronen Palan proposed that the European Union should agree a new deal with the international finance professions, whereby the industry would admit its role in tax abuse in return for more streamlined regulation.
The academic was speaking at a public hearing on the role of lawyers, accountants and bankers in the Panama Papers tax avoidance scandal.
He said: “In my public deposition, I called for a ‘new deal’ between the EU and the professions – they should come clean about their role in their abuse, but get in return a say in a more streamlined, less burdensome regulation on money laundering and tax evasion.”
The hearing was part of the European Parliament’s Committee of Inquiry into Money Laundering, Tax Avoidance and Tax Evasion.
In his written submission to the inquiry, Professor Palan said: “We estimate that about half of the global stock of money is traversed through tax havens, that is half of international saving and deposits. We also estimate that about one third of FDI [foreign direction investments] are routed through offshore.
“We estimate that there are in excess of 3 million international companies in tax havens. Of the top 500 banks in the world, 486 have a branch in the Cayman Islands.
“Most banks and middle to large size firms would have many subsidiaries, holding companies and special purpose vehicles offshore. The evidence suggest that the offshore world is deeply embedded in the world market. Panama however is an outlier.”
Professor Palan, Acting Head of the Department of International Politics at City, is involved in two major research projects related to tax abuse.
He is leading a €1.7million European Research Council-funded project called CORPLINK, which is investigating how international companies use gaps in the law to increase their power and influence.
The academic is also leading a City team’s contribution to the COFFERS project, which is researching tax abuse and money laundering in the European Union.