Debate: Pandora Papers: implications on the efforts to combat money laundering, tax evasion and avoidance
Date: WEDNESDAY, 6 OCTOBER 2021
Speaker: Paolo Gentiloni
Language: EN

The Commission has been extremely proactive over the past few years in tackling such issues to increase tax transparency, to fight aggressive tax planning and tax avoidance, and to combat money laundering with our new package adopted by the Commission in July. We now have a legislative framework in place in the EU with some of the highest tax-transparency standards and anti-money-laundering standards in the world. I am sure that you all know how many times the Directive on Administrative Cooperation (DAC) has been amended to include new areas of automatic exchanges of information and strengthen the existing provision of administrative cooperation. We plan to continue expanding its scope to include new assets on which to exchange information between Member States and the tax rulings made for rich individuals. So why, if so much has been done, do we still have the kind of revelations that hit the headlines in the last days? Well, first, I think that, more generally, some of the measures that we have tabled in the past years are still to be fully implemented by Member States to bear effective results. But second, of course, we have to keep in mind that tax avoiders and evaders also develop new practices to circumvent the measures in place, and that economic activities are more mobile and faster than any legislator around the world.  These leaks demonstrate that we cannot be complacent and we need to work continuously to further strengthen our armoury against tax abuse. This is now more crucial than ever as we work to leave behind the economic downturn and to ensure that the costs of the crisis are shared fairly between taxpayers. It is only in this way that Member States will have the fiscal space to support the economic recovery.  With this in view, the Commission is preparing new legislative initiatives that will enhance tax transparency and bring new elements under the umbrella of automatic exchange of information to reinforce further the fight against tax evasion and avoidance. This includes a legislative proposal that we will table before the end of this year to tackle the misuse of shell companies for tax purposes. And we all know, also through the Pandora Papers, what a key role these shell companies can play in global tax evasion.  We will also table a proposal on the publication of effective tax rates paid by some multinationals.  To conclude, some words on the EU listing process and how it can be used by us collectively to tackle tax havens. We have achieved results and we have obtained legislative changes in several jurisdictions through this process, and progress is picking up if you look at the increasing number of committed jurisdictions which are now listed in Annex II, our so-called grey list. In particular, in these cases we are working to ensure economic substance in jurisdictions to which tax advantages are granted and to keep track of the economic activities that take place there. Once minimal effective taxation – reached with the possible agreement at the G20 level on the OECD proposal – starts applying, I think that our perspective on economic substance might reveal a potential for upgrading. Of course we also need to review the criteria to make them more effective, as announced in the tax good governance communication. We need to make progress in order to secure a major role for the EU list in the new international tax architecture. In conclusion, I can assure you that, with the European Parliament’s support, we will make it harder and harder for tax avoiders to carry on not paying their fair share.