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Analysis: EU Action plan to strengthen the fight against tax fraud and tax evasion

Added 13 Dec 2012

Compiled by Eurodad with input from CCFD-Terre Solidaire, SOMO, TJN Europe and Alliance Sud

December 2012

On 06 12 2012 the EC released its Action Plan to strengthen the fight against tax fraud and tax evasion. DG Taxud simultaneously published two recommendations to member states. The first on aggressive tax planning and the second regarding measures intended to encourage third countries to apply minimum standards of good governance in tax matters. Please note that the analysis is not comprehensive and only addresses some of the points raised by the Action Plan and Recommendations. 

Overall Comments 

  • The action plan provides several opportunities, including specific measures on an EU definition of tax havens, measures related to automatic information exchange, closer cooperation to fight tax evasion and elusion (aggressive tax planning).  It also includes several other measures such as an EU taxpayers charter and the revision of the Parent-Subsidiary Directive which could open up new opportunities to promote our asks.
     
  • The Action Plan fails to mention CCCTB as a tool to fight against aggressive tax planning. For more information on how CCCTB works see the following report: Towards Unitary Taxation of Multinational Corporations. Available at: http://www.taxjustice.net/cms/upload/pdf/Towards_Unitary_Taxation_1-1.pdf
     
  • The Action Plan fails to mention country-by-country reporting by multinational companies as a key transparency initiative to address aggressive tax planning. The review of the Transparency Obligation Directive in 3-5 years (depending on the current negotiations of the review clause) would be an opportunity to include these information requirements in the directive.
     
  • In relation to Anti-Money Laundering rules good points include the suggestion that tax crimes might be made a predicate offence of money laundering, the calls for improved due diligence by relevant professionals and for greater international cooperation between tax authorities and other law enforcement. It is encouraging that the Action Plan calls for greater transparency around beneficial ownership but it is unclear if this will entail concrete measures such as requiring government registries to record and verify owners’ identities. It is interesting that it mentions a possible second directive to tackle money laundering in 2013
     
  • The Action Plan does not address the impact of the FATCA directive in EU countries. Luxembourg, for instance, is currently in negotiation with the US. This could open the door for similar provisions within the EU. The Finance Minister from Luxembourg has publicly acknowledged that such precedent would make it difficult to deny EU countries a similar treatment.

 Read the full analysis here: Analysis: EU Action plan to strengthen the fight against tax fraud and tax evasion