EU Parliament condemns insufficient measures against tax evasion and fraud

EU Parliament [EFE/ Patrick Seeger]

The European Parliament approved a report during its plenary session requesting EU institutions and member states to adopt measures against money laundering, fiscal fraud and tax evasion, EURACTIV’s media partner Euroefe reports.

With 505 votes in favour, 63 against and 87 abstentions, the text adopted on Tuesday (26 March) is the result of a year’s work by the special commission on financial crimes, the third of its kind introduced following scandals such as the Panama Papers, LuxLeaks or the Paradise Papers.

The report is non-binding but hopes to establish a “roadmap” for the new Parliament and the future EU Commission to make fiscal justice a political priority and intensify the work during this legislative period.

MEPs highlighted that every year EU member states miss out on one billion euros because of tax evasion and avoidance and lose out on €50 billion due to VAT fraud.

They also criticised the fact that a great number of multinationals pay laughable taxes compared to small businesses and that EU member states have started a “race to the lowest tax” to attract business by reducing corporate tax.

To find a solution to these problems, MEPs called on member states and institutions to approve a definitive EU VAT system, which is currently governed by 20-year-old rules and regulations. They suggested the creation of a consolidated common base for a corporate tax that aims to ensure companies are taxed in a fair and growth-friendly way.

Moreover, they suggested the creation of a new “financial police” within Europol, and an EU financial information centre. The rules that govern the fight against money laundering should be reinforced and an authority put in place to monitor these crimes across the EU.

Time to put an end to ‘free zones’ and ‘golden visas’

MEPs also recommended the progressive removal of “free zones” that offer fiscal advantages for certain operations, and that of “golden visas”, which allow one to obtain a country’s nationality or resident permit in exchange for money invested.

MEPs have not agreed on a request to introduce a minimum corporate tax rate applicable throughout the EU.

The hemicycle also highlighted the need to follow up on tax havens, not only outside the EU but also amongst member states. The report therefore criticised Belgium, Ireland, Luxembourg, the Netherlands, Malta, Cyprus and Hungary for “displaying traits of a tax haven” and for “facilitating aggressive tax planning”, which means that large companies are seriously reducing their contributions to public finances.

“It is a great step forward to have a list of third countries that do not cooperate on fiscal matters, but if the same criteria are applied to member states, we notice that some also facilitate aggressive strategies. Our governments need to put an end to this practice that harms our neighbours,” declared one of the reports’ co-rapporteurs, the Danish socialist Jeppe Kofod.

By referring to this tax haven blacklist`, introduced in 2017, Parliament called for sanctions for jurisdictions that are not cooperating, such as the exclusion from calls for public tenders or increased audit requirements, and voiced regret that these measures continue to depend on each country.

[Edited by Zoran Radosavljevic]

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