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Half a Billion Recovered due to Panama Papers

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Half a Billion Recovered due to Panama Papers

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Photo: Geir Ólafsson.

The Directorate of Internal Revenue has demanded almost half a billion krónur [USD 4.9 million, EUR 4.2 million] in outstanding taxes from 16 individuals, based on information in the Panama Papers, reports RÚV. The amount may rise and the tax authorities expect to recover the entire outstanding amounts.

The Panama Papers, leaked documents from law firm Mossack Fonseca containing information on individuals and companies around the globe with assets in offshore accounts, came to the attention of the public in 2016, a year after they were leaked, when a global team of journalists simultaneously broke the story after extensive examination of the documents.

The Icelandic government had already been approached with an offer to buy leaked documents pertaining to Icelanders’ assets in tax havens in April 2015, and had decided to pay ISK 37 million [USD 355,000, EUR 310,000] to obtain the information. The seller’s identity has never been revealed, but the documents appeared to be from the law firm, Mossack Fonseca, headquartered in Panama. The documents contained the names of 349 Icelandic individuals and 61 offshore companies with Icelandic ID numbers, totaling 410 Icelandic taxpayers.

After The Directorate of Tax Investigations in Iceland received the data, it decided to specially investigate 34 of those named on suspicion of criminal offenses. Some of these cases were subsequently referred to the District Prosecutor, some were dropped and others are still under review. The names of the 376 individuals and entities that The Directorate of Tax Investigations did not investigate were sent to the Directorate of Internal Revenue.

In response to an inquiry from RÚV’s news division, the Directorate of Internal Revenue stated that this has now led to a redetermination of tax liability for five individuals, up to ISK 147 million [USD 1.4 million EUR 1.2 million]. In addition to this, significant progress has been made in the cases of three other individuals, and the Directorate estimates that the redetermination amount will total ISK 140 million [USD 1.34 million, EUR 1.17 million], although this figure could still change.

Twelve people also requested a reassessment of their tax returns themselves after they received letters of inquiry from the tax authorities about their foreign assets. A total of eight such cases have been concluded and netted around ISK 200 million [USD 1.92 million, EUR 1.68 million].

In total, there are about ISK 487 million [USD 4.68 million, EUR 4.08 million] in outstanding taxes, which for the most part involved a wealth tax that was in effect between 2011 and 2015. The wealth tax amounted to up to two percent of assets in excess of ISK 75 million [USD 720,000, EUR 629,000] for individuals and in excess of 100 million [USD 961,000, EUR 839,000] for married couples. It is clear, therefore, that the taxable base behind this ISK 487 million runs into the billions.

Twenty additional offshore account cases related to the purchased data are in progress and likely to produce outcomes, according to the Directorate of Internal Revenue, although it is difficult to say at this point how much this could add to the state treasury.

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