EU seeks quick deal on tax mat­ters

The New Age (Free State) - - BUSINESS - BRUS­SELS

THE EU needs a quick agree­ment on pro­posed rules for lawyers, bankers and other ad­vis­ers that help de­vise ways to ag­gres­sively cut tax bills, the Euro­pean tax com­mis­sioner said yes­ter­day. The ap­peal for more trans­parency on tax mat­ters comes af­ter new rev­e­la­tions, known as the Par­adise Pa­pers, of wide­spread use by com­pa­nies and wealthy in­di­vid­u­als of off­shore ju­ris­dic­tions.

In a speech in the Euro­pean Par­lia­ment in Stras­bourg, Pierre Moscovici called on mem­ber states and EU leg­is­la­tors to agree “in the next six months” on pro­pos­als made by the EU’s ex­ec­u­tive com­mis­sion in June that would force tax ad­vis­ers to re­port tax­plan­ning schemes de­vised for their clients.

Moscovici also urged mem­ber states to agree by the end of the year on an EU blacklist of tax havens, to re­duce the ap­peal of off­shore ju­ris­dic­tions that charge lit­tle or no cor­po­rate tax. Ag­gres­sive tax plan­ning and tax avoid­ance are not il­le­gal in them­selves, but they are con­tro­ver­sial and in some cases could hide il­licit ac­tiv­i­ties.

The pro­posal on stricter rules on tax ad­vis­ers would im­pose sanc­tions on lawyers, ac­coun­tants, banks and other con­sul­tants that do not dis­close tax ar­range­ments that could help avoid­ance. So far, the com­mis­sion’s pro­posal has made lit­tle progress.

On tax mat­ters, all 28 EU states have to agree on re­forms, a pro­vi­sion that has al­lowed smaller, low-tax coun­tries to block sev­eral over­hauls.

Lux­em­bourg and the Nether­lands are the EU coun­tries with the largest vol­ume of as­sets held in fi­nan­cial ve­hi­cles owned by cor­po­ra­tions that shift funds within com­pa­nies across bor­ders, data cited by the Euro­pean Cen­tral Bank in an Oc­to­ber re­port show.

In to­tal, those cor­po­ra­tions hold about 10 tril­lion euros in the two coun­tries, ECB data show, mak­ing up around one-eighth of the euro zone’s en­tire fi­nan­cial sys­tem.

The en­titi es “are mainly set up in Lux­em­bourg for fi­nan­cial en­gi­neer­ing and tax­plan­ning pur­poses,” a re­port pre­pared for the Grand Duchy’s cen­tral bank said in April. The re­port on the coun­try’s shadow bank­ing sys­tem added that most of these com­pa­nies “have vir­tu­ally no phys­i­cal pres­ence in Lux­em­bourg”. – Reuters

TAX: The EU wants stricter reg­u­la­tion of those in­volved in tax af­fairs.

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