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EU's Panama Papers Probe Ends With Tax Recommendations

by Ulrika Lomas, Tax-News.com, Brussels

25 October 2017


Some EU member states are obstructing the fight against money laundering, tax avoidance, and evasion, the European Parliament committee of inquiry into the "Panama Papers" leaks has said.

The Committee of Inquiry into Money Laundering, Tax Avoidance, and Tax Evasion (PANA) approved its final report by 47 votes to 2 with 6 abstentions, after an 18-month probe into breaches of EU law, last week. The Committee also approved the inquiry recommendations, by 29 votes for, to two votes against, with 18 abstentions.

MEPs expressed regret that "several EU member states featured in the Panama Papers." They pointed to the "lack of political will among some member states to advance on reforms and enforcement." This, they suggested, had allowed fraud and tax evasion to continue.

The Committee was sharply critical of the secrecy surrounding the work of the Council's Code of Conduct Group and highlighted how moves to counter tax evasion are often "blocked by individual member states." It wants the Commission to use its authority to change the unanimity requirement on advancing tax matters.

The Committee also called for a common international definition of what constitutes an Offshore Financial Center (OFC), tax haven, secrecy haven, non-cooperative tax jurisdiction, and high-risk country, and recommended that an entity with an offshore structure should have to justify to authorities their need for such an arrangement.

The Committee stressed the need for "regularly updated, standardized, interconnected, and publicly accessible beneficial ownership (BO) registers." It also called for proposals to close loopholes that it said allow for aggressive tax planning as well as more dissuasive sanctions at both EU and national level against banks and intermediaries 'that are knowingly, wilfully and systematically involved in illegal tax or money laundering schemes.'"

Co-rapporteur Jeppe Kofod (S&D, DK) said: "Europe needs to get its own house in order before it can end the scourge of systematic money laundering, tax avoidance, and evasion. It is clear that urgent reform is needed, not least within the Council Code of Conduct Group on business taxation. The citizens of Europe have a right to know what their national governments are doing - and not doing - in the Council to help end harmful cross-border tax practices."

Co-rapporteur Petr Jezek (ALDE, CZ) suggested that the practices revealed by the Panama Papers were not inevitable. "Our conclusions are clear: had the EU and its member states played a more proactive role in the past, the problems revealed by the Panama Papers could have been avoided. They arose because EU legislation against money laundering and exchange of tax information was not properly implemented," he said.

The setting up of the Inquiry Committee was triggered by the leak of personal financial information, collectively known as the Panama Papers, which revealed that some offshore business entities had been used for illegal purposes, including fraud and tax evasion. The Inquiry Committee's report will be put to a final vote by the full Parliament as a whole in December.

TAGS: Offshore | tax | business | tax avoidance | law | enforcement | offshore | legislation | tax planning | Panama | Europe | Tax | Tax Evasion

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