EU Parliament adopts important report on money laundering, tax avoidance and tax evasion
During the December plenary session of the European Parliament, MEPs adopted a report on the tax evasion by multinational companies and the super rich. The foundations to this resolution were created in the so-called PANA Committee, which was established in the wake of the Panama Paper tax scandal.
Important demands include among other:
In future, internationally active companies shall be obliged to disclose their revenues and further important economic operating figures in each country, in which they operate (Country by Country Reporting).
It should be made more difficult for Internet companies to shift their taxation issues to low tax countries. Hence, the term ‘digital establishment’ shall be incorporated in tax law. In doing so, a connecting factor shall be created, based on which, it will be possible to tax companies in each individual country, in which they are economically active.
In addition, the European Parliament demands a ban on so-called freeports. This concerns warehouses, where all kinds of goods, for example works of art, antiques or luxury cars have been stored. However, de facto, these warehouses are located in an extra-legal area, about which no information on the owners can be obtained in future, which in turn also frustrates the levying of taxes.
Furthermore, MEPs severely criticised the Member States because of their failings in respect of combatting money laundering, tax avoidance and evasion. The EU Governments and their ministers have been requested to adopt, respectively to implement appropriate laws without any further delay in order to create more tax fairness.
Ban of letterbox companies failed because of Conservatives and Liberals
However, there is disappointment that a ban on letterbox companies, in which companies and the wealthy frequently hide their profits to avoid paying tax, failed because of the resistance of the European People’s Party, the European Conservatives and the European Liberals. This Conservative-Liberal Coalition has also been responsible for the demand for a minimum income tax rate to fail.
Following the EU Parliament the ball is now in the corner of the Council
In spite of this, the adopted Report is an important milestone for the European Parliament. Now, the responsibility to bring about clear measures against tax avoidance and evasion has in particular shifted to the Council. One can only hope that the Council (in particular the Economic and Financial Affairs Council) will at last relinquish its often applied strategy of block and watering down tax laws.