The European Parliament announced the adoption in a plenary vote of a resolution to approve the final report from the special committee on financial crimes, tax evasion and tax avoidance (TAX3), including the report's recommendations. The report takes controversial positions, including calling out seven member states for their role in facilitating aggressive tax planning and recommending countermeasures against the US should it fail to provide Foreign Account Tax Compliance Act (FATCA) reciprocity.
Under the report the committee noted that there is a lack of political will in member states to tackle tax evasion/avoidance and financial crime. The committee criticizes Denmark, Finland, Ireland, and Sweden for maintaining their opposition to the digital services tax and chastises Belgium, Cyprus, Hungary, Ireland, Luxembourg, Malta, and the Netherlands as tax heavens due to the shortcomings in their tax systems that facilitate aggressive tax planning.
In this regard, the report recommends the undertaking of effective and dissuasive countermeasures against non-cooperative jurisdictions at the EU level and not at the National level. Furthermore, the report signifies the need to give a clear definition of letterbox companies to identify the actual owners and consequently disclose them to tax authorities.
Other recommendations laid out in the proposal also include the need of multilateral tax treaties - instead of bilateral- to counteract the cum-ex fraud scheme and the need to create an intergovernmental tax body within the framework of the UN. Such institution should be well equipped and have sufficient resources and enforcement powers to ensure that all countries can participate on an equal footing in the formulation and reform of a global tax agenda to fight harmful tax practices effectively and ensure an appropriate allocation of taxing rights.
These countermeasures are expected to strengthen the current international framework sufficiently against tax avoidance and evasion.
Source: European Commission
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