Panama president denies country is tax haven

Panama has been "wrongly" labelled a tax haven, President Juan Carlos Varela said in an interview with a Japanese news agency, defending his country amid the global "Panama Papers" scandal.

Panama is scrambling to avert redesignation as a tax haven that assists money laundering after the disclosure of the offshore dealings of many of the world's wealthy, famous and infamous.

They came to light when millions of documents covering nearly 40 years of business were leaked from the archives of the Panamanian law firm Mossack Fonseca.

The revelations have had far-reaching political consequences, already bringing down the Icelandic prime minister and Spain's industry minister, while forcing others to explain their financial dealings.

"Wrongly, we have been labelled a tax haven," Varela said in the interview in Tokyo on Tuesday with Jiji Press.

"Panama is a country respectful of laws."

In the interview, Varela said that his country will establish a high-level commission, to be composed of six to eight internal and external members, within six months in order to improve transparency of its financial system.

The members are slated to include Nobel Prize-winning economist Joseph Stiglitz, Jiji reported.

Varela, who arrived in Japan on Sunday, also called for global efforts to tackle the scandal on Tuesday, insisting it is not a problem just for his country but the international financial system as a whole.

In an investment seminar in Tokyo, Varela said Panama is willing to cooperate with an Organisation for Economic Cooperation and Development initiative to share tax information, saying: "We have the door open to do it in a multilateral way."

Varela said he plans to announce a bilateral taxation scheme with Japan under OECD standards on Wednesday following his meeting with Prime Minister Shinzo Abe.

The Panamanian president's visit to Japan comes after the world's leading economies took a step last week toward denying tax evaders and money launderers the ability to hide behind anonymous shell companies.

Acting in the wake of the scandal, finance chiefs of the Group of 20 meeting in Washington on Friday supported proposals requiring authorities to share the identities of shell companies' real owners.

They also backed creating a blacklist of international tax havens that do not cooperate with information-sharing programmes.