What the Shadow Vault Tells Us--Quiet Fault Lines Between Japan and the Panama Papers -2016, Japan

What the Shadow Vault Tells Us--Quiet Fault Lines Between Japan and the Panama Papers -2016, Japan

The Panama Papers are a group of approximately 11.5 million internal documents, or 2.6 terabytes, leaked from the Panamanian law firm Mossack Fonseca, which were released through the International Consortium of Investigative Journalists (ICIJ) in April 2016. The documents include incorporation documents, contracts, passport copies, and other documents spanning more than 40 years, bringing to light the fact that political and business figures, corporations, and cultural figures in various countries were using tax havens to manage and conceal their assets. The leak sent shockwaves around the world as an incident that was not merely a scandal, but one that illuminated the structural shadows of global capitalism.

Numerous names related to Japan appeared, reportedly numbering more than 400. Many were paper companies established in tax havens such as the British Virgin Islands and Panama, where Japanese nationals and Japanese companies were documented to have been involved as nominees, beneficiaries, and founding associates. For example, it was reported that Dentsu, Japan's largest advertising company, had established a corporation in the British Virgin Islands through its overseas subsidiary. Dentsu acknowledged this establishment and explained that it was a legitimate international tax strategy and not illegal. In fact, this practice is common among global companies, but it has been criticized by society as a path to tax avoidance.

It was also discovered that an executive involved in a local subsidiary of the Sony Group had established a Panamanian corporation under his own name. Although this was not a direct involvement by Sony itself, but rather a personal act for the purpose of asset management, it attracted attention from the perspective of corporate ethics and compliance. A number of other names were also identified, including former executives and former presidents of real estate companies, insurance companies, and trading companies, all of whom were formerly employed by Japanese listed companies. Some of the corporations were established for the purpose of inheritance planning or overseas real estate investment, but some corporations were reported to be suspected of lending their names.

In some cases in the entertainment and cultural fields, persons with the same names as artists and comic book authors were listed, but their identities were not verified, and the involvement of clear celebrities such as Jackie Chan and Lionel Messi was not confirmed in Japan. This may be one of the reasons why the Panama Papers did not develop into a widespread political scandal or social movement in Japan.

Following the release of the Panama Papers, Japan's National Tax Agency launched investigations of Japanese nationals and corporations involved, and there have been reports of undeclared income and additional taxation based on the actual status of assets in accordance with the anti-tax haven taxation system. As a result, some individuals are reported to have been assessed additional taxes in the tens of millions of yen. In the case of corporations as well, the relationship between paper companies and the actual entities and the attribution of profits were scrutinized, and there were cases where evasive tax-saving schemes were uncovered.

However, the establishment of an offshore corporation itself is legal internationally. The problem arises when income subject to taxation in Japan is not declared, when the source of funds is unclear, or when corporations are manipulated through the use of name lending. Although there are many cases that cannot be legally determined as illegal, the structure emerged as a strongly questionable issue of corporate governance and tax ethics.

This leak triggered the OECD to strengthen BEPS measures internationally, and Japan showed its willingness to participate in information exchange systems and financial monitoring frameworks; subsequent leaks, such as the Paradise Document in 2017 and Offshore Leaks in 2019, followed, accelerating the global trend toward tighter regulation of wealth management and transparency. The trend accelerated.

The significance of the Panama Papers for Japan lies in the fact that they went beyond the mere drawing of the line between illegal and legal and brought to light more fundamental questions about the relationship with society through taxation and the responsibility of wealth. Tax havens are not merely places to hide assets, but have become mirrors that reflect the contradictions of modern society by measuring the ethical distance between the state and individuals or corporations.