NGOs Tell EU To Tackle Tax-Related Capital Flight
Monday, December 23, 2013
There is a significant discrepancy between the tough political rhetoric used by European governments and their actions on tax avoidance and evasion, according to a new report.
The report, compiled for the European Network on Debt and Development (Eurodad) by civil society organizations (CSOs) in 13 European countries, is the first of a series to be published over the next three years. The CSOs examined the tax-related capital flight policies implemented in their respective states, along with the steps taken to tackle money laundering and tax avoidance and evasion, and attitudes towards European Union (EU) laws.
They found that each of the governments surveyed failed to demand sufficient levels of tax transparency from companies. Multinational corporations do not face full country-by-country financial reporting requirements, and a majority of governments were reluctant to establish public access to information on beneficial ownership. In a similar vein, although countries continue to exchange information on tax matters, the data used to monitor such exchanges is rarely available to the public.
Among the recommendations made is that all EU member states adopt Union-wide rules to establish publicly accessible registries of the beneficial owners of companies, trusts and foundations. Regulations governing full country-by-country reporting for all large companies should include a global overview of the corporation, the name of each country in which it operates, and details of all its subsidiary companies. Groups should be made to reveal their financial performance in each country, distinguishing between sales within the group and to other companies, along with all property owned and full details of the amounts owed in tax, and the figure actually paid for each specific levy.
The CSOs further call for tax evasion to be made a predicate offence to money laundering, and for the development of mechanisms to measure the impact of tax-related capital flight on developing countries. European governments are urged to proactively support the creation of a global standard on automatic information exchange, establish an intergovernmental tax forum under the auspices of the United Nations, and undertake a rigorous study (jointly with developing nations) of the merits, risks, and feasibility of more fundamental alternatives to the current international tax system.