Photo © Maksym Yemelyanov – Fotolia
(BRUSSELS) – MEPs on a special committee on tax rulings set up by the European Parliament produced a raft of tough measures Tuesday designed to make corporate taxation ‘fairer and clearer’.
In the report, which will be voted by Parliament as a whole during their July session, the MEPs called for an EU public register of beneficial owners of companies, a tax havens blacklist, sanctions against non-cooperative tax jurisdictions, action against abuse of “patent box” regimes, a code of conduct for banks and tax advisors, tax good governance rules in all EU trade agreements and a withholding tax on profits leaving the EU.
“Tax dumping is done at the expense of the general public and small- and medium sized companies, who are the backbone of our European economy. In a fair tax system, multinational companies also pay their share and they should do so where they add value and make their profits”, said co-rapporteur Michael Theurer MEP.
“With this report, Europe is stepping up to the plate on the fight against tax evasion and tax havens,” said his co-rapporteur Jeppe Kofod. “We’re setting clear demands for increased accountability, effective deterrents in the form of markedly increased sanctions for tax havens, banks, tax advisors and companies, and we’re calling for increased European and international cooperation on this hugely problematic issue,” he added.
Welcoming Commission plans to draw up a common EU blacklist of non-cooperative jurisdictions, committee members also called for a common definition of “uncooperative jurisdictions” and said the blacklisting procedure should include an “escalation” provision to allow for dialogue with the jurisdiction in which shortcomings have been identified before deciding to blacklist it.
MEPs are advocating sanctions against non-cooperative jurisdictions, including a possibility to review and even suspend free trade agreements and prohibiting access to EU funds. They add that sanctions should also be put in place for companies, banks, accountancy and law firms and tax advisors proven to be involved in illegal, harmful or wrongful activities with those jurisdictions.
The MEPs also said EU Member States should draw up sanctions against company managers involved in tax evasion and make it possible to revoke business licences in cases where professionals are involved in illegal tax planning and evasion schemes. The Commission should also explore the possibility of introducing financial liability for tax advisors engaged in unlawful tax practices, they added.
Finally, the report also criticises “patent box” tax regimes for intellectual property revenues. These “have not proven to be effective in fostering innovation. Regrettably, they are used by multinational companies for profit shifting through aggressive tax planning schemes (…) which leads to a race to the bottom. To prohibit misuse and to make sure they are linked to genuine economic activity, the Commission should propose binding union legislation.”
Further information, European Parliament
