Panamanian police have raided the headquarters of the law firm whose leaked documents unleashed a global scandal over how the rich and powerful use offshore companies to hide their wealth.

Organised crime police surrounded Mossack Fonseca's headquarters in Panama City  on Tuesday as the offices were searched along with several other branches.

Prosecutors said the raids had taken place "with no incident or interference", but gave no details on the results of the searches.

The fallout from the so-called Panama Papers, which law firm Mossack Fonseca claims were stolen when hackers from abroad breached its system, has spread around the world.

A year-long probe by a consortium of investigative journalists examined the papers, which came from around 214,000 offshore entities and covered almost 40 years.

The world's business, political and even sports elite have been put  on the defensive.

Iceland's Prime Minister Sigmundur David Gunnlaugsson resigned following Panama Papers leak [EPA]

Iceland's prime minister was forced to resign after it emerged he owned shares in the country's banks through an offshore company.

The leaders of Britain and Ukraine have faced questions over their taxes, while Russian President Vladimir Putin has sought to divert attention from his entourage by claiming it is all a United States plot against him.

China has been censoring online forums and media to stifle discussion of the papers, which showed relatives of eight of its political top brass also owned offshore companies.

And wealthy citizens in Australia, France, India, Mexico, Peru, Spain and elsewhere face investigation over suspected tax avoidance after their names figured in some of the 11.5 leaked million documents.

Panama has hit back at the apparent blemish on its image as an important financial crossroads.  It warned France on Tuesday, before the raid on the law firm, of unspecified diplomatic measures if Paris did not remove it from a blacklist of tax havens, a move it took following the leaks.


READ MORE: Does offshore banking encourage corruption?


France is also urging the European Union and all member states of the Organisation for Economic Cooperation and Development to follow suit.

Such an international designation would deal a heavy blow to Panama's vital financial services sector, which the government has been trying to make more transparent.

Australia's tax commissioner has also said that he intends to propose a plan to pool international data to hunt tax dodgers at an upcoming meeting of global tax officials in Paris.

The EU unveiled plans on Tuesday to force the world's biggest multinationals to faithfully report earnings and pay their fair share of taxes, saying that the Panama Papers scandal added to the need for change.

Source: Agencies