The European Commission has announced next steps in its campaign to boost tax transparency in order to fight tax evasion and avoidance in the EU, taking into account the problems highlighted in the recent media leaks known as the Panama Papers.

The commission adopted a proposal to further reinforce EU rules on anti-money laundering to counter terrorist financing and increase transparency about who really owns companies and trusts. In addition, the Commission presented a Communication setting out priorities for our work towards fairer, more transparent and more effective taxation.

The Panama Papers are 11.5 million leaked documents that detail financial and attorney–client information for more than 214,488 offshore entities. The leaked documents, created by Panamanian law firm and corporate service provider Mossack Fonseca, illustrate how shell corporations are used for fraud, tax evasion, and evading international sanctions.

Under the EC’s guidelines, tax authorities must now know the ultimate beneficiary behind every company, trust, and fund. Existing and bank and investment accounts will be subject to due diligence controls. Passive companies and trusts, such as those highlighted in the Panama Papers, will also be subject to greater scrutiny and tighter rules.

The commission recognized that tax transparency must extend across borders. It will examine how EU member states could automatically exchange national information on beneficial owners of companies and trusts with a potential tax impact.

The commission will also examine how to shed more light on tax advisors’ activities and create disincentives for those that promote and enable aggressive tax planning. The commission will assess the need for measures to increase the protection for whistleblowers.