Thousands protest demanding Icelandic PM's resignation

Reykjavik (AFP) - Thousands of Icelanders took to the streets late Monday calling for their prime minister's resignation after leaked tax documents dubbed the "Panama Papers" prompted allegations that he and his wife used an offshore firm to hide million-dollar investments.

Protesters filled the square outside Iceland's parliament in Reykjavik, footage on public television RUV showed, answering a call from opposition parties to demonstrate against Prime Minister Sigmundur David Gunnlaugsson.

Police provided no estimate of the size of the crowd, but said the demonstrators outnumbered the thousands who in 2009 brought down the right-wing government over its responsibility in Iceland's 2008 banking collapse.

"Take responsibility" and "Where is the new constitution?" read some of the signs carried by demonstrators on Monday, referring to the country's new charter drawn up after the 2009 political crisis and which has since been held up in parliament.

Financial records published by the International Consortium of Investigative Journalists showed that Gunnlaugsson, 41, and his wife Anna Sigurlaug Palsdottir bought the offshore company Wintris Inc. in the British Virgin Islands in December 2007.

The company was intended to manage Palsdottir's inheritance from her wealthy businessman father, the amount of which has not been disclosed.

Gunnlaugsson transferred his 50-percent stake to his wife at the end of 2009, for the symbolic sum of one dollar.

But when he was elected a member of parliament for the first time in April 2009 as a member of the centre-right Progressive Party, he neglected to mention the stake in his declaration of shareholdings, as required by law.

Gunnlaugsson has meanwhile denied any wrongdoing or tax evasion and insisted Monday he would not step down. He said he never hid any money abroad and that his wife paid all her taxes on the company in Iceland.

A motion of no-confidence was presented to parliament by the opposition, and will be submitted to a vote at an as yet undetermined date.

"The prime minister should immediately resign," former Social Democratic prime minister Johanna Sigurdardottir said in a message posted on Facebook.

Almost 28,000 Icelanders, in a country of just 320,000 inhabitants, have also signed a petition demanding his resignation.