The report this week of a leak of hundreds of thousands of documents from the Panama-based law firm Mossack Fonseca makes for disturbing reading. It lifts the veil on the dark side of international finance, providing evidence of the activities of black-listed companies linked to drug smuggling and international terrorism, to individuals linked to bribery and corruption and to the international arms trade. Bearing in mind that we are dealing here with just one firm in a global industry, the scale of this leak is staggering – over 200,000 entities linked to over 200 countries including 322 linked to Ireland.

The details emerging from this leak point to a global web of interlinked legal and financial firms that facilitates illegality but also supports legal but morally dubious tax planning that allows firms and wealthy individuals to minimise their tax liabilities at the expense of national exchequers. Much of this aggressive tax planning is carried out in secret behind the shield of the sort of paper companies identified in this leak.

This is an international issue that requires a coordinated international response. One such response has been the OECD’s Base Erosion and Profit Shifting (BEPS) project which seeks to remove anomalies and loopholes in international tax law. Ireland has been fully supportive of this project and it is very much in Ireland’s interest to continue to do so.

There are also steps that can be taken in Ireland. One such step, which I have been advocating for consistently over a number of years, is the introduction of minimum effective tax rates for firms and individuals. A minimum effective tax rate would put a floor under the tax liability of firms and individuals. It would undermine the incentives for aggressive tax planning and ensure that every individual and firm pays a fair amount of tax.

Although the details that have emerged so far point to quite limited exposure to Ireland – just 322 entities out of a total of over 200,000 – there is no room for complacency. Any suspicion that the highest standards are not being maintained would fatally undermine the stability of one of our most important industries where over 35,000 are employed. Where there is even the slightest suspicion of impropriety or illegality by any Irish firm or individual arising from the Mossack Fonseca data leak, it must be fully investigated and appropriate actions including sanctions imposed where necessary. Specifically, the Revenue Commissioners must examine this information to see if tax has been avoided in Ireland and, if so, the appropriate measures to take.

In summary, this massive leak of documents from Panama should be a wake-up call for action both in Ireland and internationally. At an international level, there is a need of coordinated action to address what is a global problem. In Ireland, we need to investigate this leak in respect of Irish firms and individuals and take appropriate action where necessary. Finally, we should urgently consider reforms such as the introduction of minimum effective tax rates to undermine the incentives for tax avoidance by wealthy individuals and firms, enduring that every citizen pays their fair share of tax, no more and no less.