EU states obstructing tax transparency
EU-level efforts to crack down on tax avoidance appear to have generated few results following the latest leaks by a consortium of international journalists.
A year-long investigation into over 13 million documents from two offshore service providers, published on Sunday (5 November) revealed loopholes that member states like Germany refuse to close in EU bills currently under talks.
“EU governments such as Germany have been standing against the rising tide of financial transparency,” Carl Dolan, who heads Transparency International’s EU office, said in a statement.
Dolan says EU capitals have yet to sign up to two European Commission proposals aimed at shedding light on money laundering, tax evasion and avoidance.
The latest cache of documents, also known as the Paradise Papers, was sifted through by hundreds of journalists and exposed links between offshore tax havens and more than 120 politicians and world leaders.
Doing business in offshore jurisdictions, many of which are British oversea territories, is not illegal. But the latest leak revealed how the Bermuda-based global offshore law firm Appleby bends or ignores the rules for clients suspected of corruption.
It follows a separate leak in April last year called Panama Papers that exposed the details of some 200,000 offshore entities, many of them tied to drug crime and criminal gangs.
A few months later, the EU commission tabled reforms of the European anti-money laundering directive (AMLD).
But EU states balked at plans to set up public registries to identify the real owners behind shell firms, trusts and similar legal structures.
NGOs are pressing for public access to so-called beneficial ownership information for both companies and trusts.
Such information reveals who is behind schemes often used to hide cash from national tax coffers.
“The EU has so far failed to respond to the Panama Papers,” said Rachel Owens from the UK-based NGO Global Witness.
The next round of talks between the EU institutions on the AMLD is set to place next week.
The EU parliament wants companies and trusts to reveal the identities of beneficial owners. The Council, representing member states, argues it would violate people’s privacy.
“They [member states] have spent the last year blocking proposed changes that would tackle these problems: by failing to act they are complicit in this corrupt system,” said Owens, in a statement.
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