Facing flak globally in the wake of Panama Papers leak, President Barack Obama today said his administration is taking steps to ensure that foreigners don’t dump their illegitimate money behind shell firms in the US.
“We are plugging a gap in our tax rules that foreigners can exploits to hide their assets to evade taxes,” Obama said.
The Treasury Department and the Internal Revenue Service (IRS) are issuing a proposed rule to ensure foreigners can’t hide behind anonymous shelf companies in the US, Obama said told reporters at the White House.
Obama, who is under pressure to curb the flow of corporate money out of the US, listed several other measures announced by his administration in the past 24 hours to bring in transparency, tighten the noose around tax evaders and plug-in loopholes in the banking sector.
“These actions are going to make a difference,” he said.
Noting that his government will not be able to complete this job unless the Congress acts as well, he called on the Republican-controlled Congress to pass a new legislation that requires all firms formed inside the US to report information about their real owners to the Treasury Department’s Financial Crimes Enforcement Network.
“That is going to help law enforcement better investigate and prevent financial crimes. I’m calling on Congress to provide the Justice Department with additional tools to investigate corruption and money launderers.” Obama said recent months have shown just how big a problem corruption and tax-evasion have become around the world.
“We saw what happened with the release of the Panama Papers, and we’ve seen the degree to which both legal practices of tax avoidance that are still unfair and bad for the economy, as well as illegal practices that, in some cases, involve nefarious activities continue to exist and to spread,” he said.
“So, combating this kind of this tax evasion and strengthening the global financial system has been priorities of mine since I took office, and they’re part of our broader, ongoing efforts to make sure that the rules aren’t rigged and our economy works for everybody,” he said.
Obama said his administration has taken steps to ensure US tax laws are enforced, including leading efforts to crackdown on offshore invasion.
“And as a result, thousands of individuals have come forward to disclose offshore accounts and pay the taxes that they owe, along with interest and penalties.” “We are requiring banks and other financial institutions to know, verify and report who the real people are behind shelf corporations that set up accounts at those institutions.
One of the main ways that companies avoid taxes, or wealthy individuals avoid taxes is by setting up a bunch of shelf corporations and making it harder to trace where monies are flowing and what taxes are owed. We’re saying to those financial institutions, you have got to step up and get that information,” he said.