Speaking at the start of a debate in the European parliament, the top EU commissioner for the economy, Paolo Gentiloni, has said that the EU must respond to the revelations in the Pandora papers with a fresh clampdown on the use of shell firms by tax avoiders. He said that it must be done to ensure the costs of the COVID-19 recovery are fairly shared.
Gentiloni praised the “meticulous” work of journalists around the world. He said the work exposed how lawmakers were being outpaced by those seeking to avoid paying tax. He said, “the revelations, drawn from 11.9m leaked files from companies hired by wealthy clients to create offshore structures and trusts in tax havens, demanded new legislation.The commission is preparing new legislative initiatives that will enhance tax transparency and bring new elements under the umbrella of automatic sharing of information to reinforce the fight against tax evasion and avoidance. This includes legislative proposals that we will table before the end of the year to tackle the misuse of shell companies for tax purposes. We all know through the Pandora papers what a key role these shell companies can play in tax evasion. These leaks demonstrate that we cannot be complacent and we need to work continuously to further strength our armoury against tax abuse. This is more crucial than ever as we work to leave behind the economic downturn and ensure the costs of the crisis are shared fairly between taxpayers.”
The Pandora papers, leaked to the International Consortium of Investigative Journalists (ICIJ) in Washington DC have revealed the secret offshore affairs of 35 world leaders, including current and former presidents, prime ministers and heads of state.
Gentiloni urged EU to back the upcoming legislation, which was expected even before the scandal broke, and fully implement existing measures designed to catch tax evasion and aggressive tax planning.
He added that the EU executive will propose new rules “on the publication of effective tax rates paid by some multinationals”.
He said “We have to keep in mind that tax avoiders and evaders also develop new practices to circumvent measures in place and that economic actors are more mobile and faster than any legislature around the world.”
EU finance ministers have been criticised this week for removing Anguilla, Dominica and Seychelles from the bloc’s blacklist of tax havens on the basis that while they “do not yet comply with all international tax standards”, they “have committed to implementing tax good-governance principles”.
The EU tax-haven list now has nine jurisdictions blacklisted as “non-cooperative”: American Samoa, Fiji, Guam, Palau, Panama, Samoa, Trinidad and Tobago, US Virgin Islands, and Vanuatu.
Gentiloni said he believed the blacklist and the use of a grey list that puts jurisdictions on notice that they are being monitored was achieving results. “We have obtained legislative changes in several just through this process. Progress is picking up … We will make it harder and harder for tax avoiders to carry on not paying their fair share.”
Responding to the criticism from MEPs, he added that the criteria for inclusion on the blacklist, introduced in 2017, may need to be revised.