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MEPs Support Tough New Anti-Avoidance Regime

Thursday, July 7, 2016

Members of the European Parliament (MEPs) have backed proposals for a package of anti-avoidance measures that includes a tax haven blacklist, sanctions against "uncooperative jurisdictions," and an EU-wide withholding tax.

The recommendations were prepared by Parliament's Special Committee on Tax Rulings II (TAXE II), and were passed by 514 votes to 68, with 125 abstentions. TAXE II had previously voted in favor of the recommendations, by 25 to six, with nine abstentions.

The committee's report advocated the following:

  • A common EU "blacklist" of non-cooperative jurisdictions, as proposed by the European Commission, with a common definition of "uncooperative jurisdictions," and an escalation provision to allow for dialogue with jurisdictions prior to their inclusion on the list;
  • Sanctions against uncooperative jurisdictions, including the 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 with uncooperative jurisdictions;
  • Sanctions for company managers involved in tax evasion, and the power to revoke business licenses in cases where professionals are involved in illegal tax planning and evasion schemes;
  • A possible financial liability for tax advisors engaged in unlawful practices;
  • EU-wide legislation to prevent the abuse of patent box regimes;
  • Guidelines to better define permissible transfer pricing activities;
  • Better protection for whistle-blowers;
  • An Commission proposal before the end of 2016 for a common consolidated corporate tax base;
  • 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;
  • A code of conduct for banks, tax advisors, law- and accounting firms;
  • An EU Tax Policy Coherence and Coordination Centre to be created within the Commission; and
  • A global register of assets held by individuals, companies, and entities, such as trusts and foundations, to which tax authorities would have full access.

Rapporteur Michael Theurer, who co-authored the recommendations with Jeppe Kofod, said: "Tax dumping is done at the expense of the general public and small- and medium-sized companies, which are the backbone of our European economy. In a fair tax system, multinational companies also pay their share and they should do so where they add value and make their profit."

Kofod added: "With this report, Europe is stepping up to the plate on 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."