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European finance ministers on Thursday urged their counterparts in the Group of 20 advanced economies to share more information about the owners of offshore companies and trusts, marking another step in a global effort to clamp down on tax dodging.

The initiative comes as authorities world-wide are struggling to contain the fallout from the leak of thousands of private documents from a Panamanian law firm that specialized in offshore tax deals for wealthy international clients.

In a letter to the G-20 released by the U.K. Treasury, the finance ministers of France, Germany, Italy, Spain and the U.K. said they have agreed to share data on the owners of offshore entities and called on other jurisdictions to do the same.

The five ministers said that, under their new initiative, such information will be automatically exchanged among their countries' tax authorities, allowing them to identify and pursue tax evaders, money launderers and "aggressive" tax avoiders. The plan builds on existing information-sharing deals that allow tax authorities to track citizens' incomes and assets.

"To be fully effective such exchange should be on a global basis. We therefore hope you will support this initiative," the ministers wrote their colleagues. They recommended the G-20 ask the Organization for Economic Cooperation and Development, which has drawn up a package of measures aimed at closing international tax loopholes, to develop a single global standard to coordinate such exchanges.

The trove of confidential documents leaked from the Panamanian law firm Mossack Fonsesca and the information they contain has sparked public anger from Iceland to the U.K. to Russia and sown fresh doubts about the effectiveness of global efforts to rein in tax avoidance.

The fallout cost Iceland's prime minister his job and prompted questions in the U.K. about Prime Minister David Cameron's own tax affairs after it emerged that he once owned shares in an offshore fund set up by his late father. Mr. Cameron and other senior figures in government—including Treasury chief George Osborne, a signatory of the finance ministers' letter—took the unusual step of making details of their tax arrangements public in an effort to quell public demands for greater transparency.

The U.S. wasn't among the nations announcing Thursday's agreement, and nonprofit groups have criticized the country for allowing foreigners to use shell companies to hide assets in states such as Nevada, Delaware and Wyoming.

The Treasury Department is close to finishing rules that would require that banks and other financial institutions know the beneficial owners behind companies they serve. Treasury also plans to propose a rule to make foreign-owned limited liability companies to obtain a tax identification number.

"The misuse of legal entities to obscure beneficial ownership is a significant weakness in an otherwise strong and resilient U.S. financial system, and it can only be resolved with meaningful congressional action," Josh Drobnyk, a Treasury spokesman, wrote in a blog post on Wednesday.

The Obama administration has asked Congress to enact a law that would require banks and other financial institutions to provide the government with account balances and other information on assets held by foreigners as part of a global information-exchange system where the U.S. is lagging.

Write to Jason Douglas at jason.douglas@wsj.com and Richard Rubin at richard.rubin@wsj.com

(END) Dow Jones Newswires

April 14, 2016 16:25 ET (20:25 GMT)

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