Sigmundur David Gunnlaugsson.jpg
Photograph: EPA/STR ICELAND OUT

Iceland's ruling coalition parties have opened talks about revamping the government after Prime Minister Sigmundur David Gunnlaugsson said he was taking a break from politics after being linked to a tax haven, a cabinet member said on Wednesday.

Fisheries and Agriculture Minister Sigurdur Ingi Johannsson, who has been tipped to take over as premier, said the issue had been raised during talks late Tuesday with Finance Minister Bjarni Benediktsson, head of the Independence Party.

The two were to meet later Wednesday.

Johannsson also Wednesday met Premier Gunnlaugsson, who has not formally resigned. Gunnlaugsson issued a statement late Tuesday saying Johannsson was to serve as a prime minister "for an unspecified amount of time."

Johannsson said earlier on the radio that Gunnlaugsson's move was "honourable" and would contribute to create "calm" but admitted the revelations have harmed the Progressive Party.

Gunnlaugsson, who faces a no-confidence vote in parliament, has been under pressure to resign after a massive data leak from a Panama law firm suggested he and his wife secretly channelled funds to an offshore tax haven in the British Virgin Islands.

He has rejected any wrongdoing by himself or his wife and said he would stay on as party leader.

A poll commissioned by public broadcaster RUV showed that 81 per cent of voters polled wanted Gunnlaugsson to resign.

The current government's term is scheduled to end in April 2017, but both centre-right parties have seen support drop since taking office. Meanwhile, the opposition Pirate Party that gained 5 per cent in the 2013 elections has surged and scored 43 per cent in a poll published Wednesday.

The leak of 11.5 million documents from Panama-based law firm Mossack Fonseca, which details how money was funnelled to shell companies in tax havens, has called into question the finances of numerous politicians, sports stars and celebrities from across 80 countries.

Among those named in connection with the tax dodging schemes is Gianni Infantino, the new president of football's governing body FIFA, who is said to have signed a television rights contract with businessmen implicated in a US corruption probe.

Infantino and UEFA dismissed reports based on the Panama Papers saying that Infantino signed the 2006 contract on Champions League TV rights for Ecuador, at 111,000 dollars, with offshore company Cross Trading, owned by Argentine brothers Hugo and Mariano Jinkis.

While UEFA has acknowledged the Cross Trading deal, it insists that "There was never any suggestion that anything improper took place," and Infantino says, he "never personally dealt with Cross Trading nor their owners."

After obtaining the documents from a Mossack Fonseca employee, German daily Sueddeutsche Zeitung enlisted the help of the Washington-based International Consortium of Investigative Journalists (ICIJ) and other media organisations to analyse them. The Panama-based law firm at the centre of a massive data leak has rejected any wrongdoing.

Organization for Economic Co-operation and Development (OECD) General Secretary Jose Angel Gurria accused Panama of failing to act on international financial data exchange, calling the country the last major nation to still allow offshore funds to be hidden from tax authorities and prosecutors.

The country has not stuck to promises to follow international standards for tax transparency, Gurria said in Berlin on Tuesday.

The government of Panama rebutted the OECD's critique, saying Panama has been made out to be the single scapegoat, even though the so-called Panama Papers mention 21 other countries, Presidential Minister Alvaro Aleman said Tuesday.

Aleman pointed out that Panama recently changed a series of laws related to regulating the financial sector.

In February, the OECD Financial Action Task Force removed the country from the list of states with deficient international exchange of financial and tax information.

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