The indignation caused by the revelations of the Pandora Papers investigation and the inertia attributed to the Member States is not weakening in the European Parliament (see EUROPE 12805/4, 12804/2). Despite a feeling of déjà vu fuelled by repeated scandals, MEPs are not resigned and are putting forward their ideas for tightening up European tax rules.
Many representatives of the political groups, who spoke at the European Parliament’s plenary session on Wednesday 6 October, considered that the Ecofin Council’s withdrawal, the day before, i.e. 2 days after the Pandora Papers, of countries such as the Seychelles from the EU’s ‘black’ list, a list which singles out non-cooperative countries and jurisdictions in the tax field, weakened the credibility of this mechanism which is supposed to put pressure on tax havens.
Jonás Fernández (S&D, Spain) said he was “ashamed” that these plenary debates are repeated every time there is a scandal without the effective tools to combat tax evasion being in place. “No matter how outraged we are, nothing changes!”, Luis Garicano (Renew Europe, Spain) noted that this inertia can also be explained by the fact that those who should be fighting tax evasion are sometimes the target of the scandals, such as the Czech Prime Minister, Andrej Babiš.
“We are told that there is no public money for health or climate. (...) This is not a foregone conclusion! We need full transparency”, said Yannick Jadot (Greens/EFA, France). Expressing her “rage” after 10 years of fighting tax havens, the Co-Chair of The Left group, Manon Aubry of France, blasted the Ecofin Council’s decision on Tuesday. None of the States involved in the Pandora Papers are on the EU’s ‘black’ list of tax havens, she said.
On behalf of the Slovenian Presidency of the EU Council, Anže Logar recalled that the EU list is intended to “encourage positive change” on the part of non-cooperative countries, and is not a ‘black’ list. Removing a country from the list does not mean that the review stops, as the country is placed on a second list comprised of countries that have made commitments on tax cooperation.
A reform of the Code of Conduct on business taxation
“There is money, it’s just hidden. (...) Every year, more than €1,000 billion are lost in tax revenues”, noted Aurore Lalucq.
The French Socialist has detailed the main proposals of her draft report on harmful tax practices which will be definitively adopted on Thursday (see EUROPE 12762/18). The report calls for a reform of the Code of Conduct on business taxation to include “general schemes” and “the preferential regime for natural persons who attract high net worth individuals”. It is also necessary to “rely on criteria of economic substance to verify the real economic activity of companies and prevent them from becoming mere front companies”, she added. She called for “binding instruments” and greater transparency in the work of the EU Council’s Code of Conduct Group.
European Commissioner for Economy Paolo Gentiloni has reiterated that the European Commission will present a proposal for a Directive at the end of 2021 to directly address the issue of shell companies used for tax evasion. He also called for stricter criteria for determining the EU’s ‘black’ list. (Original version in French by Mathieu Bion)