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30/09/2016

Finance ministers give mixed reaction to Commission response to Panama Papers

Euro & Finance

Finance ministers give mixed reaction to Commission response to Panama Papers

EU finance ministers met in Amsterdam, where they expressed both support and concerns about the Commission's tax proposals.

[EU2016 NL/Flickr]

The release of the Panama Papers has pushed EU finance ministers into stepping up the fight against tax fraud. However, some of the bloc’s financial chiefs have concerns about the Commission’s proposal to publish the tax records of large companies. EurActiv Germany reports.

“There is a much greater sense of urgency now,” said the chairman of the ministers’ conference, Dutch Minister of Finance Jeroen Dijsselbloem (Labour Party), im Amsterdam Saturday (23 April).

By the end of the summer, the European Commission wants to compile a list of tax havens.

French Minister for Finance Michel Sapin warned that the scandal could be fuel for the fires of European populism and that it could promote the growing feeling of a two-tier society. “If we don’t react sufficiently, populism is going to get stronger,” he said.

EU foreign ministers to discuss Panama Papers

EXCLUSIVE/EU foreign ministers meeting are expected to discuss the fallout from the Panama Papers at their meeting next week, it emerged today (15 April) – even though the topic is not on the formal agenda.

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The ministers agreed to collaborate by May on measures that will allow the Commission to draw up a list of tax havens. They also agreed to trial a “pilot project” on the automatic exchange of information relating to holding and shell companies being used to conceal money offshore.

Commission proposals to publish the tax and financial data of large companies was given a mixed reception. The executive’s plan would apply to mulitnational companies with turnover exceeding €750 million.

Dijsselbloem was one of the ministers to back the plan, arguing that European citizens should be able to see “where large companies pay their taxes”. However, he did point out that certain member states are concerned that the affected companies would be put at a disavantage, competitively. Their worries are based on the fear that competitors could comb through a company’s financial data and glean information about its business strategy.

Panama Papers scandal puts pressure on EU to toughen tax laws

The Panama Papers scandal has put political pressure on the European Commission to toughen its tax laws, and in particular for multinational companies, EU Economic and Financial Affairs Commissioner Pierre Moscovici has said.

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Hard-nosed German Minister of Finance Wolfgang Schäuble (CDU) also expressed reservations about this particular aspect of the Commission’s response to the scandal. Publishing such information and the potential subsequent “naming and shaming” could reduce a company’s willingness to share information with financial bodies, he warned. Schäuble added that it would be better if just the relevant tax authorities got the information.

Malta and Austria also voiced their concerns about the Commission’s plan, with Austrian minister Jörg Schelling urging his colleagues not to miss their targets by giving into the “hysteria of the Panama affair”.

Background

The Panama Papers exposed offshore companies used to avoid tax, and has embroiled  figures including Vladimir Putin, Ukrainian President Petro Poroshenko,  David Cameron,  Icelandic Prime Minister Sigmundur Davíð Gunnlaugsson, and Climate Commissioner Miguel Arias Cañete.

It comes at a time when tax avoidance is high on the political agenda.

The fight against tax evasion is one of the Juncker Commission's main priorities. News of the systematic, state-sanctioned tax evasion practices of many multinationals based in Luxembourg, known as the Luxleaks scandal, broke shortly after the new Commission was sworn in.

On 18 March, the executive presented a package of measures aimed at strengthening tax transparency, notably by introducing a system for the automatic exchange of information on tax rulings between member states.