Earlier this week, the European Parliament’s Committee of Inquiry into Money Laundering, Tax Avoidance and Tax Evasion released its final findings on last year’s Panama Papers scandal, with the report being approved by 47 votes in favor to 2 against and 6 abstentions.
As laid out eighteen months ago, the report’s main objective was to look into potential instances in which European law was broken due to money laundering, tax evasion and tax avoidance activities.
To kick things off, MEPs involved in the report said that little has been accomplished to curtail these illicit activities as a result of a “lack of political will among some member states to advance on reforms and enforcement.”
EP’s Committee on Money Laundering, Tax Avoidance & Tax Evasion’s Recommendations
Most importantly, several recommendations stemmed from this study into Europe’s role in the Panama Papers scandal.
European Parliament members who participated in the report agreed that there has to be “a common international definition of what constitutes an Offshore Financial Centre (OFC), tax haven, secrecy haven, noncooperative tax jurisdiction and high-risk country.”
Furthermore, the Committee pushed to implement a “regularly updated, standardised, interconnected and publicly accessible beneficial ownership (BO) registers,” and “close loopholes which allow for aggressive tax planning as well as more dissuasive sanctions at both EU and national level against banks and intermediaries” involved in illicit activities.
Additionally, the Committee members agreed, “any entity with an offshore structure should have to justify to authorities their need for such an account.”
Finally, the Committee reasserted the need for a list of non-cooperative jurisdictions in Europe, one that should be released by the end of 2017.
Members of European Parliament Speak Out on Tax Evasion & Tax Avoidance
Members of European Parliament had some harsh words to share with regards to Member States’ involvement in the Panama Papers.
Danish co-rapporteur Jeppe Kofod said, “Europe needs to get its own house in order before it can end the scourge of systematic money laundering, tax avoidance and evasion. It is clear that urgent reform is needed, not least within the Council Code of Conduct Group on business taxation. The citizens of Europe have a right to know what their national governments are doing - and not doing - in the Council to help end harmful cross-border tax practices.”
Furthermore, Czech MP Petr Jezek, who was also involved in the Panama Papers report, added, “Our conclusions are clear: had the EU and its member states played a more proactive role in the past, the problems revealed by the Panama Papers could have been avoided. They arose because EU legislation against money laundering and exchange of tax information was not properly implemented.”
Additionally, Neena Gill, an MEP from the UK, wrote in an op-ed in The Independent that “the current lack of co-operation between member states, chronic underfunding and a lack of human resources of the supervisory authorities, as well as poor implementation and application of laws and sanctions, have created an environment where it is easier to avoid paying taxes. “
Sven Giegold, an MP from Germany who’s also part of the Committee, went a step further and called out specific jurisdictions on his personal website.
In a blog article published this week, Giegold writes that “some EU member states have made tax dumping a business model for companies and wealthy individuals, thus causing massive damage to other EU countries.”
“Banks and law firms in Luxembourg, Great Britain, Malta and Cyprus have set up hundreds of letterbox companies in Panama to the detriment of other EU countries,” he says, adding that they “bear a huge responsibility for violating tax justice and distorting fair European competition.”
For a full version of this report, check out the Committee of Inquiry into Money Laundering, Tax Avoidance and Tax Evasion’s website.
What are your thoughts on these findings? Do the Committee’s recommendations seem reasonable? Let us know in the comments section!