If you have no idea about what it is, how it happened and why it's such a big deal,

then let's find out.

To fully understand this, you might need to know about tax havens and offshore corporations.

Imagine Mr. Sneaky is a successful businessman, he runs a big company making $100 in revenue

each year. However, he can only spend $70 because he has to pay the government $30 of

corporate income tax. Mr. Sneaky doesn't like that, so he invests $90 to some offshore corporations

in Panama. The invested money is listed as business expenses, which is tax-deductible,

so Mr. Sneaky only has to pay $3 of tax because his revenue is now only $10 .He will get most

of his investment back after paying a small fee for these companies, thanks to the incredible

low tax rate of Panama, as known as a tax haven. Criminals, celebrities and corrupted

politicians are also interested in using offshore corporations' services for money laundering

and tax evasion because of anonymity, which is what normal financial institutions can't

provide.

The Panama Papers is a massive data leak of Mossack Fonseca, a law firm in Panama, specialized

in incorporating companies in offshore jurisdiction and wealth management. Mossack Fonseca runs

a worldwide operation with 600 employees working in 42 countries. It is considered the world's

fourth biggest offshore law firm. Mossack Fonseca operates in tax havens including Switzerland,

Cyprus, British Virgin Islands, Isle of Man, Bahamas and so on.

The leak consists of 11.5 million internal documents created by Mossack Fonseca between

1970s and early 2016, including 2.6 terabytes of e-mails, pdf files, photos and excerpt

from Mossack Fonseca's database. This data leak is one of the biggest ever; it's even

bigger than 2010 US diplomatic cables leak and 2013 Edward Snowden scandal.

A year ago, an anonymous source contacted Süddeutsche Zeitung, a German newspaper about

the leak. The newspaper subsequently shared the files with the International Consortium

of Investigate Journalists. The files were distributed and analyzed by 107 media organizations

in over 80 countries by around 400 journalists. The first report were released on April 3rd,

2016, exposed financial activities and offshore holdings of many people, including political

figures and other prominent officials. The full report is expected to be released in

May.

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