EU seeks quick agreement on tax avoidance curbs after Paradise Papers

Rules requiring tax advisers to report tax planning arrangements should be agreed and a blacklist of tax havens drawn up after the revelations contained in the Paradise Papers, according to the European Commission’s tax commissioner

In a speech in the European Parliament in Strasbourg, Pierre Moscovici appealed for more transparency in the tax affairs of businesses and wealthy individuals, noting that ‘every day new information throws a little more light on a the well-oiled machine of aggressive tax planning’.

‘We have known for a long time that multinationals, wealthy taxpayers, consulting firms and banks, work hand-in-hand, to exempt huge amounts of income from taxation. And we are not facing isolated incidents, but systemic, global, and organised practices,’ he said.

Moscovici called on member states and EU legislators to agree ‘in the next six months’ on proposals made by the EU’s executive commission in June that would force tax advisers to report tax-planning schemes devised for their clients. He also urged member states to agree by the end of the year on an EU blacklist of tax havens.

Under the transparency proposals, tax advisers would systematically declare schemes to the tax authorities of the buyer's country. 

‘If these schemes are illegal, the tax authorities will be able to prosecute,’ said Moscovici. ‘If they are legal, tax administrations will be able to spot the fault and repair it.’

On the six month timeframe he proposes, Moscovici said: ‘It's a simple proposition, so it's a question of political will. There is no reason to postpone this adoption.’

Moscovici originally proposed a blacklist of tax havens in the wake of the Panama Papers in 2016, and reiterated his call for its introduction.

‘I urge member states to adopt it at the next Council of Finance Ministers on 5 December. On 5 December we must have a blacklist of tax havens,’ he said. ‘Problem countries now have the opportunity to make commitments at the highest political level in writing by the end of this week. 

‘Member states have indicated that these commitments will be taken into account when adopting the blacklist in early December, but I invite member states, the Code of Conduct group, to remain firm and united on EU requests and to accept only very concrete commitments.

Alongside those proposals, Moscovici called for greater transparency on beneficial ownership under the Money Laundering Directive, in particular suggesting it should be made public ‘in order to fight against the opaque structures that the Paradise Papers have revealed in the open’.

‘Today, I must admit that the negotiations are struggling to find a satisfactory outcome,’ he warned. ‘I deeply regret it, and I encourage the co-legislators to make every effort to ensure that these new rules can be implemented as soon as possible. We would have a publication accessible to all – citizens, media, NGOs – accounting and tax data that are now available to tax administrations only. It is through the pressure of the press, but also by the pressure of public opinion, that we can change the rules.’

The Paradise Papers, released by the International Consortium of Investigative Journalists (ICIJ) on 6 November 2017, detail fresh revelations of large multinationals and wealthy individuals holding substantial sums offshore as part of complex financial arrangements.

Moscovici's speech (in French) is available here.

Report by Calum Fuller

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