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Tax transparancy

TAXATION : ECON MEMBERS BACK COMMISSION'S PROPOSALS
25/09/13
Europolitics

The members of the European Parliament's Committee on Economic and Monetary Affairs (ECON) backed, on 24 September, the European Commission's initiatives to increase tax transparency in the EU. MEPs have started to review a draft report by George Sabin Cutas (S&D, Romania) on the Commission's June proposal to amend EU legislation on administrative cooperation in the field of taxation (Directive 2011/16/EU). The aim of the proposal is to extend the scope of the EU's automatic exchange of information (AEOI) system to new products.

Under the current directive, from 2015, the member states will have to apply this system to five categories of income and capital provided they have the necessary information at their disposal: professional income, director's fees, life insurance products not covered by other directives, pensions and property and real estate. Under the Commission's proposal, dividends, capital gains, all other forms of financial income and account balances will be added to the list of categories that are subject to the AEOI within the EU. Under the Commission's proposal, the availability of information' clause would be removed for the new categories. Cutas “fully supports” this proposal, suggesting a few changes, in particular in terms of data protection, sanctions for infringements and negotiations with third countries.

RACE AGAINST THE CLOCK

“This would pave the way for the EU to have the most comprehensive system of AEOI in the world.” The rapporteur stressed that this proposal, together with the EU's savings tax directive, which the member states should in principle revise before the end of 2013, will mean that member states share as much information amongst themselves as they have committed to doing with the US under the Foreign Account Tax Compliance Act (FATCA). This would be useful, especially given that the Organisation for Economic Cooperation and Development (OECD) is working hard to develop a new global standard for tax transparency modelled on the US FATCA – which could raise compatibility issues with EU law, in particular from a technical point of view. “The EU needs to be at the forefront of establishing a global standard for AEOI, and by establishing a European system of AEOI, the Commission can lead the way in its work with the OECD in shaping the global standard,” Cutas' report notes. The ECON committee will vote on his report in early November, followed by a plenary vote in December.

STATES NAMED AND SHAMED

Cutas has received support – which has been ambivalent at times – from the main political groups, which all agree on the need to guarantee the protection of personal data.

This is particularly the case for Slawomir Nitras (EPP, Poland), who regrets that when it comes to tax transparency, the EU is allowing itself to be carried along by the US' fast-paced rhythm. He deemed the Commission's agenda to be “perhaps too ambitious”  .

Rui Tavares (Greens-EFA, Portugal) sees this as “a step in the right direction,” adding that it is time for Luxembourg and Austria to put an end to their bank secrecy. Even though Olle Schmidt (ALDE, Sweden) supports the Commission's initiative and the amendments submitted by the rapporteur, he cooled their enthusiasm. He stressed that the fight against fraud and tax evasion is an extremely delicate matter and urged Parliament not to assume the member states' responsibilies.

Even though Olle Schmidt (ALDE, Sweden) supports the Commission's initiative and the amendments submitted by the rapporteur, he cooled their enthusiasm. He stressed that the fight against fraud and tax evasion is an extremely delicate matter and reminded Parliament to not take on the responsibility which lies on the member states' shoulders. The member states were also put down by Nikolaos Chountis (GUE-NGL, Greece), who criticised their lack of political will to tackle this problem head on.