Cover for what?

Added 08 Nov 2013

Eurodad partner Both Ends has launched its new report, entitled “Cover for what?” (16 pages). The report demonstrates how the state-backed export credit agency of the Netherlands – Atradius Dutch State Business (Atradius DSB) – supports financial transactions which regularly involve parties registered in tax havens. 

According to Both Ends’ latest findings, these types of transactions allow multi-national enterprises (MNEs) to adopt aggressive tax avoidance positions that undermine the ability of countries to collect tax effectively, corroding their tax sovereignty. 

The report unravels the complex structures employed by these MNEs operating in tax havens in order to drastically reduce their tax liability and to conceal the involvement of shadowy third parties. The report shows that there is a lack of effective measures in place to exclude parties involved in tax evasion and money laundering from obtaining support from Export Credit Agencies (ECAs). 

Therefore, the report makes the following recommendations:

For export credit agencies: 

  • Exclude transactions structured via tax havens from obtaining government support export credit cover;
  • More robust due diligence procedures for all transactions that are structured via tax havens;
  • Require companies involved in transactions for which ECAs provide cover to apply country-by-country reporting on the taxes they pay;
  • Publicly disclose the beneficial ownership of all companies involved in transactions for which ECAs provide cover; and
  • Elaborate indicators to identify money laundering or tax evasion in transactions ECAs are considering supporting.

For the OECD:

  • Ensure that the Action Plan on Tax Base Erosion and Profit Shifting is operationalised by its Export Credit Group (ECG) and the ECAs of member countries. 

For the European Commission:

  • Ensure that the Anti-Money Laundering Directive is operationalised in the Regulation on Officially Supported Export Credits and its reporting requirements; and
  • Include a provision for the activities of ECAs in the upcoming revised Fourth Anti-Money Laundering Directive.