GUE/NGL
News

Panama Papers & Tax Avoidance: Pressure on the rich and powerful

The European Parliament (EP)  today adopted a mandate for a committee of inquiry into the Panama Papers scandal. At the same time, MEPs voted on a bill containing a toolkit of measures to fight corporate tax avoidance which the European Commission had proposed in January 2016 based on the OECD BEPS (Base Erosion and Profit Shifting) Project.

GUE/NGL coordinator for the TAX2 special committee, Fabio De Masi, comments:

“A strong mandate for the inquiry will help to put pressure on tax evaders and money launderers. Our group managed to include a much-needed revision of the EU’s anti-money laundering and automatic information exchange provisions. The current rules allow for opaque nominee directors in letterbox companies and exclude widely-used trusts from information exchanges. We need full transparency and strong rules now. The German government has to give up its blockade of a public registry for the ultimate owners of companies and other legal structures.

“It also is the hypocrisy of the EP's grand coalition to go for a full inquiry now while having prevented a political investigation into the LuxLeaks, protecting the architects of EU tax havens like Commission President Juncker. And even the new committee will remain a blunt sword if the Parliament’s rights to inquiry, as enshrined in the treaties, are not honoured. Council and Commission keep blocking a proposal on the matter which was voted in 2012 by the entire EP.”

De Masi concludes: “After each scandal we hear talk of reforms, but when it comes to deciding on meaningful reform, the majority in this house backs off. The anti-BEPS directive ends up with provisions on fictitious interest which are in part weaker than what the Commission proposed and what the US already apply. Much-needed coordinated source taxation of financial flows into tax havens was rejected as was a phase-out of the harmful patent boxes, which even the OECD explicitly label as bad economic policy. They help tax avoidance while not enticing any additional research activity. The Commission’s much-touted blacklisting exercise against tax havens will be a diplomatic nightmare and ineffective if it does not cover jurisdictions like Delaware and Nevada in the US, or comes without proper enforcement sanctions. Public country-by-country reporting needs to apply universally and should be disconnected from the blacklisting.”