On Monday 28 March, MEPs from the Subcommittee on Fiscal Affairs (FISC) held discussions with experts over the exchange of tax information with certain jurisdictions outside the European Union, such as the British Crown Dependencies, British Overseas Territories and certain US states, which have been named in the Pandora papers scandal (see EUROPE 12898/25). For them, an automated exchange of information about beneficial owners of securities and accounts would be a good way to fight tax fraud.
Moran Harari, Lead Researcher and Interim Director of Financial Secrecy and Governance at the NGO Tax Justice Network, has made a number of recommendations to improve the exchange of information on fiscal matters. In her opinion, information about the ownership of legal vehicles, including trusts, should be registered and held by a government authority in a public centralised registry.
Similarly, she suggests that all jurisdictions should implement an automatic exchange of beneficial ownership information, in parallel with the OECD’s Common Reporting Standard. To do so, they will need to apply a wider-wider approach to data collection.
For EU countries, Harari advises that they should annually publish their reporting standard statistics on tax information on an aggregate basis.
Last but not least, a court should not be allowed to opt for a “voluntary secrecy” provision. “The authorities have to go through long and cumbersome procedures to obtain information, and the prohibition on the use of a ‘fishing expedition’ prevents authorities from obtaining any information on tax abusers they don’t know about”, said Harari. Indeed, the tax authorities have the right to request information about tax evaders that they already know about, but not on those of whom they have no knowledge.
Maria José Garde, Chair of the OECD Global Forum on Transparency and Exchange of Information for Tax Purposes, noted that the exchange of fiscal information is something recent, and has been happening since 2014. It was strengthened in 2016 “to include information about the beneficial owner”. However, due to the Covid-19 pandemic, “it is not yet possible to know how this standard has been integrated by some countries”. According to the initial results, some shortcomings have been identified, but many countries are in the process of putting in place integration measures.
Regarding the issue of money laundering, which was raised by Luděk Niedermayer (EPP, Czech Republic), Ms Garde insisted on making a “distinction” between tax fraud and money laundering (see EUROPE 12917/24). Without information about the beneficial owners, it is difficult to know what the money is being used for. (Original version in French by Anne Damiani)