Following months of work, MEPs on Thursday adopted a comprehensive set of recommendations stemming from the lessons learnt from the Pandora papers and other similar data leaks.
The report, authored by Niels Fuglsang (S&D, DK) was debated on Wednesday afternoon in plenary and adopted on Thursday with 465 votes in favour, 5 votes against and 36 abstentions. It calls for continued momentum to enact proposed legislation, more commitment to correctly implement and enforce what has already been agreed, and makes suggestions for a host of new reforms considered essential.
During the debate Mr Fuglsang said, “Some at the top are refusing to play by the rules. The system we have is absolutely rigged. On the one hand, one system applies to 99% of people while another system applies to the top 1%. This has to change! Through our report we are proposing changes to fix the system. Notably we need to discuss a minimum tax on capital gains, regulation on conflict of interest in the audit and advisory braches in financial intermediaries, and rules to prevent the misuse of shell companies.”
Main recommendations
The report makes recommendations on protecting journalists and whistle-blowers, reducing conflicts of interest, better regulating intermediaries, improving reporting and information sharing, particularly on beneficial ownership, better addressing practices that can harm tax collection such as through the use of crypto-assets, golden passports, shell companies, or certain real estate transactions.
Equally importantly, the report takes aim at tax regimes designed to attract foreign nationals and digital nomads, and calls for these regimes to be assessed. An EU version of the UK’s system to investigate unexplained wealth should also be considered, the report says.
Similarly to other previously adopted resolutions, the adopted text again criticises the system in place for the elaboration of the EU’s tax haven black list and goes into some detail of how it should be reformed. Notably MEPs call on Council to extend the mandate of the Code of Conduct Group (Business Taxation) to include preferential personal income and capital tax regimes, and personal income and wealth tax regimes. The report also calls on the Council to reassess the United States in the framework of the EU list, arguing that the US presents shortcomings, particularly regarding the tax transparency criteria.
Finally, the report asks the Commission to publish a list of assets that have been frozen or confiscated following Russia’s invasion of Ukraine and to provide detailed information on the progress made by Member States in repealing or withdrawing the citizenship or residence permits of Russian or Belarusian individuals who have obtained their status through investment.
Background
In October 2021, the International Consortium of Investigative Journalists published a massive data leak, which once again shed light on the role of tax havens, intermediaries and the use of shell companies by individuals to evade taxes. Since then, the tax subcommittee organised a series of hearings to address these topics. These include a public hearing on ‘Tax avoidance and evasion in the Pandora Papers’ in November 2021, a hearing on jurisdictions appearing prominently in the Pandora Papers in March 2022 and a hearing on regulating intermediaries in April 2022. Further to these hearings, various MEP delegation visits to European countries also contributed to the findings and recommendations adopted today.
Source – EU Parliament