The European Parliament has announced that the special committee on financial crimes, tax evasion and tax avoidance (TAX3) has adopted a report on fairer and more effective taxation and tackling financial crimes.
A European Parliament investigative committee report condemns seven member states for operating as tax havens including Belgium, Cyprus, Hungary, Ireland, Luxembourg, Malta, and the Netherlands. Those countries are included as tax havens since they facilitate aggressive tax planning.
Apart from the countries chastised as a tax haven, the report also puts scrutiny on Switzerland. The report urges the council to properly assess Switzerland’s tax regime to ensure that no harmful tax regimes are introduced.
The report, adopted by the committee on February 27, also condemns the United States for not ensuring the Foreign Account Tax Compliance Act’s (FATCA) reciprocity. The non-reciprocity, from the EU’s perspective, means that the US is basically the largest offshore center that still does not automatically share information with the member states. Empirical evidence shows that there has been a significant rise in foreign bank deposits inflows in the United States and that this is attributable to FATCA. A significant part of these foreign bank deposits is likely to be held by European Union citizens.
According to the committee, the credible blacklist combined with thorough sanctions are needed to fight tax havens and money laundering centers outside and within the EU. The two instruments will help the fight against financial crimes more effectively.
Besides tax havens and sanctions, the TAX3 report emphasizes the need for better protection for whistleblowers and journalists. The report recommends introducing a U.S.-style reward system for whistleblowers, and it urges Malta and Slovakia to identify the instigators behind the murders of the two investigative journalists. In addition to the whistleblower's protection, the committee also recommends establishing a global tax body within the United Nations and calls for “tax good governance” clauses in new EU agreements with non-EU countries.
The TAX3 rapporteurs also recommend getting rid of the golden visa and passport programs, as the investment schemes are an outdated mechanism and leave the door open for criminal elements to move into the EU financial system.
The report was adopted with 34 votes to 4 and 3 abstentions. It will now be voted on by the EP at the end of March after discussion in its plenary session. The committee, which is the successor to investigative committees dating back to the LuxLeaks scandal, has called for the creation of a permanent subcommittee on tax evasion.
Source: European Parliament
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