Brussels, 29/05/2013 (Agence Europe) - Ensuring cooperation and coordination at global level on the drawing up of a world standard for the automatic exchange of information (AEI) among tax authorities, ensuring reciprocal measures in the EU and the United States on information exchange and transparency in future bilateral agreements, along with data protection and ensuring equal exchanges. These were the key ideas that emerged from a hearing at the European Parliament (EP) on 28 May organised by the EP's economic and monetary affairs committee, which was attended by representatives of the US treasury, the OECD, the European Commission, ActionAid (NGO) and the European Banking Federation, who answered questions from MEPs on the pros and cons of introducing a global AEI along the lines of the FATCA rules in the United States for preventing tax evasion.
FATCA is a tax deduction at source system and exchange of bank information with the US tax authorities by other countries around the world about US passport-holders with accounts in banks outside the United States. The US administration has drawn up two model agreements that have been signed with 75 jurisdictions to date to get the countries in question to comply with FATCA from 1 January 2014. The OECD is planning to use the model of the deals already signed to draw up an international FATCA for 1 January 2014. The European Commission is planning to cooperate in similar work at the G8 and G20 and has offered to brings its own rules into line with the AEI requirements of FATCA or even move beyond the FATCA measures (there is a suggestion to extend AEI in Europe to five different types of revenue and capital from 1 January 2015 onwards). Commission representative Philip Kermode said the two systems needed to be harmonised, which raised difficulties vis-a-vis disparities in the information required in the US and the EU and the different types of tax system in the 27 EU member states. He said there was the danger of a number of individual deals co-existing with the US within the EU if the Commission were not given a negotiating mandate to arrange a single deal for the EU. The Commission hopes to remedy this by changing the EU directive on mutual assistance, along with other directives.
More generally, the representative of ActionAid warned of the danger of developing countries being excluded from a global AEI that would impact on their economic weight and ability to put pressure on the promoters of the idea (the EU and US). He called for the international rules in the future to allow developing countries access to the information without charge. The European bank representative criticised the unilateral approach of the United States in forcing through FATCA, along with potential conflicts of legislation when information is sent to the US tax offices. She said banks wanted bilateral deals based on the communication of bank information by national tax authorities (model 1) rather than directly to the US tax authorities (model 2), an approach also backed by the European Commission. She raised questions about tax authorities' ability to manage all the information to be submitted within the given deadlines and said that only information needed to fight fraud should be sent so that it was not swamped in a mass of other information.
On behalf of the EP, Sirpa Pietikäinen (EPP, shadow rapporteur, Finland) said a technical AEI system should be introduced that would apply across the world in the same way, with a taxpayer identification number recognised internationally. She called for harmonised definition of tax havens and the setting up of a blacklist of tax havens. On behalf of the S&D, Elisa Ferreira of Portugal said that a common strategy was needed to block certain practices by non-cooperative jurisdictions and called for homogenous accounting rules at EU level. Sophie In't Veld (ADLE, Netherlands) criticised the extra-territorial nature of FATCA and raised the question of data protection. The fact that agreements exist among member states on the exchange of information does not make it legal to send information to other countries, she said, calling for a legal framework of the current agreements and an over-arching EU-US deal with a good negotiating mandate for the Commission, rather than “vague, asymmetrical” deals between the member states and the US. On behalf of the Greens, German MEP Sven Giegold said that seeking an EU27 agreement ran the risk of a country being able to veto a process that is well on track. Ivo Stresjcek (ECR, the Czech Republic) criticised FATCA as a “bureaucratic monster” that could hamper international trade. (FG/transl.fl)