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MEPs Call For Tougher Anti-Avoidance Rules

Wednesday, June 22, 2016

The European Parliament's Special Committee on Tax Rulings II has made a raft of recommendations intended to tackle tax evasion, including the creation of a "tax havens black list" and an EU-wide public register of beneficial owners.

Committee members voted in favor of the recommendations by 25 to six, with nine abstentions. The proposals will be put to parliament as a whole next month.

Jeppe Kofod, who co-authored the report containing the recommendations, said: "With this report, Europe is stepping up to the plate [in] the fight against tax evasion and tax havens. We're setting clear demands for increased accountability, effective deterrents in the form of markedly increased sanctions for tax havens, banks, tax advisors, and companies, and we're calling for increased European and international cooperation on this hugely problematic issue."

The report contained the following recommendations:

  • A common EU blacklist of non-cooperative jurisdictions, as proposed by the European Commission, with a common definition of "uncooperative jurisdictions." The blacklisting procedure should include an escalation provision, to allow for dialogue with the jurisdiction in question, prior to its being blacklisted.
  • Sanctions against non-cooperative jurisdictions, including a possibility to review and suspend free trade agreements and prohibit access to EU funds.
  • Sanctions for companies, banks, accountancy and law firms, and tax advisors proven to be involved in illegal, harmful, or wrongful activities in non-cooperative jurisdictions.
  • Sanctions against company managers involved in tax evasion, and the option to revoke business licenses in cases where professionals are involved in illegal tax planning and evasion schemes.
  • The Commission should explore the possibility of introducing financial liability for tax advisors engaged in unlawful practices.
  • Steps to prohibit misuse of patent box regimes, and binding EU legislation to ensure that the regimes are linked to genuine economic activity.
  • A Commission proposal for a Common Consolidated Corporate Tax Base before the end of 2016.
  • An EU-wide withholding tax, to be collected by member states, to ensure that profits made in the EU are taxed at least once before leaving it.
  • An EU Tax Policy Coherence and Coordination Centre, to be created within the EU Commission.
  • A global register of all assets held by individuals, companies, and entities, such as trusts and foundations, to which tax authorities should have full access.
  • Improved guidance on what is allowed with regard to transfer pricing.
  • Better protection for whistleblowers.
  • A code of conduct for banks, tax advisors, law, and accounting firms.