Obama to crack down on international tax evasion in response to Panama Papers revelations

Barack Obama will initiate a crackdown on international tax evasion in response to recent disclosures in the Panama Papers revealing the scale of offshore financial activity.

In a series of initiatives announced by the White House last night, Obama would take executive action to close loopholes used by foreigners in the US and  call on Congress to pass legislation.

Though certain steps would run into political hurdles in an election year, the package of measures are among the most comprehensive response yet to the Panama Papers revelations, disclosed by a consortium of international journalists including The Guardian.

''In recent weeks, the disclosure of the so-called 'Panama Papers' – millions of leaked documents reportedly revealing the use of anonymous offshore shell companies – has brought the issues of illicit financial activity and tax evasion into the spotlight,'' said the White House in a statement.

''The Panama Papers underscore the importance of the efforts the United States has taken domestically, and the efforts we have undertaken with our international partners, to address these shared challenges.''

Earlier, Obama has been under pressure to curb the flow of corporate money out of the US, was among the first world leaders to respond to the record-breaking leak last month.

''There is no doubt that the problem of global tax avoidance generally is a huge problem,'' Obama told reporters in an unscheduled appearance last month. ''The problem is that a lot of this stuff is legal, not illegal.''

Under the proposed legislation, companies would be required to name the owners of any new entities they created and would expand the justice department's power to call for information in some corruption cases.

The administration also finalised a rule that  would require financial institutions to identify the account holders hiding behind shell companies, even as it proposed new rules to eliminate a loophole that allowed some foreign-owned companies to hide assets in the US.