George Osborne
George Osborne (L) flanked by Germany's Finance Minister Wolfgang Schaeuble (R), addresses a news conference at the IMFJonathan Ernst/Reuters

The EU's top five economies have agreed to share information on secret business owners and trusts in an effort to stamp out tax dodging. Chancellor George Osborne hailed the deal as a "hammer blow" against tax evaders.

The agreement between the UK, France, Germany, Italy and Spain is in response to the Panama Papers leak which revealed how the rich and powerful stash their wealth from the taxman by using complex networks of companies operating in a highly secretive manner. Treasury officials said the deal would make it more difficult for companies and rich individuals to continue operating without paying the appropriate tax, according to the BBC.

"Today we deal another hammer blow against those who hide their illegal tax evasion in the dark corners of the financial system," the chancellor said at the IMF's spring meeting in Washington DC.

"Britain will work with our major European partners to find out who really owns the secretive shell companies and trusts that have been used as conduits for evading tax, laundering money and benefiting from corruption," he added.

The fallout from the Panama Papers prompted senior politicians, including Prime Minister David Cameron, Labour leader Jeremy Corbyn and Osborne to publish details of their financial affairs. Corbyn said the government should contemplate imposing direct rule on British overseas territories and crown dependencies from the UK in a bid to crackdown on tax havens.

Osborne also called on other G20 members to follow suit. "It is Britain and our European partners setting the pace on beneficial ownership transparency of not just companies but also trusts with tax consequences – and I expect that the rest of the world will move to follow our example," he said.

"It shows the benefit of working together. No single country can tackle international tax evasion alone – and Britain should never fool itself into thinking that it can do this by itself," the chancellor added.

In a letter addressed to fellow G20 nations, the five EU countries said: "In our view, this new initiative will take a significant step forward in improving the transparency of beneficial ownership information and in removing the veil of secrecy under which criminals operate.

"The recent extensive leaks from Panama show the critical importance of the fight against tax evasion, aggressive tax planning and money laundering ... Criminals continue to find ways to exploit the cracks in the current system, setting up complex structures in various and often multiple locations to hide their activities ... As with tax evasion, this requires a global response."