The EU Parliament blasts the Council about the tax dealings of the wealthy

European Parliament. Joint meeting of the Committee on Economic and Monetary Affairs (ECON) and the Special Committee on Tax Rulings and Other Measures Similar in Nature or Effect (TAXE). Exchange of views between the TAXE Committee President Alain Lamassoure (on the left) with Commission President Jean- Claude Juncker and Commissioner for Economic and Financial Affairs, Taxation and Customs Pierre Moscovici (on the right). (European Parliament Audiovisual Services. Event Date: 17/09/2015. Copyright: © European Union 2015).

European Parliament. Joint meeting of the Committee on Economic and Monetary Affairs (ECON) and the Special Committee on Tax Rulings and Other Measures Similar in Nature or Effect (TAXE). Exchange of views between the TAXE Committee President Alain Lamassoure (on the left) with Commission President Jean- Claude Juncker and Commissioner for Economic and Financial Affairs, Taxation and Customs Pierre Moscovici (on the right). (European Parliament Audiovisual Services. Event Date: 17/09/2015. Copyright: © European Union 2015).

The European Parliament once more honored its role as the authentic exponent of the will of the European citizens. Last Tuesday it dismissed as a “missed opportunity” the EU Council’s decision to water down the mandatory exchange of the ‘tax rulings’ between member states. A ‘tax ruling’ is a special taxation arrangement accorded to a company or an individual by the tax authorities of a country. It’s accorded mainly to foreign taxpayers providing an actual tax haven bargain and an assurance about how certain aspects of taxation will be applied in each specific case.

The ‘tax rulings’ made headlines in November 2014 when the world learned that the authorities of Luxembourg had accorded special tax ‘treatment’ to hundreds of wealthy individuals and multinationals in order to park their money in the Grand Duchy. It also became known that more EU and other European countries offer similar ‘services’ facilitating wealthy individuals and companies to evade taxation.

It all started in Luxembourg

After the Luxembourg scandal broke out, Jean- Claude Juncker, the then newly elected President of the EU Commission felt obliged to do something in order to appease the anger of the public opinion. He himself must have been behind these Luxembourgish tax agreements. He had served a Prime Minister and Minister of Finance of the Grand Duchy for many years.

All that said, the Commission, under his instructions, prepared a proposal to make it mandatory for EU member states to exchange information on their tax rulings. However, this proposal was met with disappointment by the European Parliament for its ineffectiveness. Even worse, the powerful ECOFIN council, regrouping the 28 EU ministers of Finance, further watered it down obliging Markus Ferber (EPP, DE), the Parliament’s rapporteur, to voice his dismay at the “directive’s limited scope and late entry into force”. His report was approved by the Parliament’s Economic and Monetary Affairs Committee last Tuesday by 49 votes in favor, 0 against and 6 abstentions. Tax experts say that the more transparent and communicated those tax dealings are, the less will be used for tax evasion. Let’s see that in detail.

The member states are reluctant

When the draft text of the new directive on the ‘tax rulings’, as it was formulated by the 28 member states at the ECOFIN council became known, the European Sting commented that, “The EU (is about) to fight cross-border tax evasion with a toothless directive”. On 8 October the Sting’s first story concluded that the “text of this new EU directive aimed at improving transparency in assurances given to companies about how their taxes are calculated cannot cover the many possibilities the modern aggressive or active ‘tax planning’ offers”.

What the Parliament wants

In any case, the European Parliament has proposed very concrete amendments to the text that the ECOFIN council ministers agreed. The MEPs want the following changes:

*the directive should apply to all tax rulings, not just the cross border ones “given that purely national transactions can also have cross-border effects. The Council made the directive’s scope cross-border only”.

* The Parliament insists that the European Commission should be able to use the information exchanged between member states on the tax rulings for purposes other than just overseeing that the member states conform to the directive.

* The Parliament wants the automatic exchange of information to start as soon as possible, whereas the Commission proposes that it should start on 1 January 2016 and the Council agreed on 1 January 2017.

*The Commission says that the mandatory exchange mechanism should apply to tax rulings issued in the ten years before it enters into force, whereas MEPs say it should apply to all rulings that are still valid on the day the directive enters into force. From its side, the Council insists that the directive should apply only to rulings, amendments or renewals of rulings after 31 December 2016.

* The MEPs insist that the information should be communicated “promptly after the ruling is issued” rather than “within one month following the end of the quarter during which the ruling was issued” as the Commission proposes. The Council deal says that the information should be provided “within three months following the end of the half of the calendar year during which the ruling was issued”. This means that if a ruling is issued in January, the mandatory exchange of information can take place until 30 September.

Different visions

Obviously, there are key differences in the three texts. Initially, there was the one drafted by the Commission. Then the ECOFIN council agreed upon a drastically modified one, while the Parliament wants to change them both. It goes without saying that the parliamentarians are the strictest of them all concerning the effectiveness of the directive against tax evasion. What is at stake here relates to the ability of the member states to accord special tax treatments to wealthy individuals and probably help some companies to evade taxation.

Understandably those ‘rulings’ realized in one EU member state may damage the tax collection ability also of another country. The question is why so far the 28 governments tolerated such an abominable arrangement? And the equally obvious answer is that every country wants to safeguard its right to use tax allowances in order to attract money and investments. Unfortunately, those dealings have very rarely led to investments in the real economy and the creation of jobs. In most cases they have just facilitated the ‘parking services’ for capital a country chooses to offer.

Now the Parliament and the Council have to begin consultations in order to achieve a compromise on the final text. The directive is expected to be adopted at a forthcoming Council meeting but the European Parliament has to officially give its opinion first.

Advertising

Advertising

Advertising

Advertising

Advertising

Advertising

Advertising

Advertising

Advertising

Advertising

Advertising

Advertising

Advertising

the European Sting Milestones

Featured Stings

Can we feed everyone without unleashing disaster? Read on

These campaigners want to give a quarter of the UK back to nature

How to build a more resilient and inclusive global system

Stopping antimicrobial resistance would cost just USD 2 per person a year

Who is responsible for public health? The tendencies and its benefits –or not– on Health Education around the world

Main results of Environment Council of 09 October 2018

This is our chance to completely redefine the meaning of work

This is how companies are working together to create a world without waste

This is the state of the world’s health, in numbers

UN chief urges Somalis not to be ‘deterred’ by latest deadly terror attack

EU-Ukraine Free Trade Agreement sees the light as Moscow’s reaction once more looms

Central African Republic: Guterres says UN mission committed to protecting civilians, helping stabilize country, as violence flares

Why gin made from peas helps the environment

Blockchain is facing a backlash. Can it survive?

Libya’s migrants and refugees with tuberculosis ‘left to die’ in detention centres

The European Sting writes down the history LIVE from G20 Leaders’ Summit in Turkey

Service Engineer Intern – 1991

Gender disparity in salary and promotion in medicine: still a long way to go

5 steps that could end the plastic pollution crisis – and save our ocean

This Syrian national has been trapped at Kuala Lumpur airport for 3 months

The decline of our oceans is accelerating, but it’s not too late to stop it

This graphene battery can recharge itself to provide unlimited clean energy

As tech disrupts our jobs, it’s not too late to turn pain into gain

The UK referendum has already damaged Europe: even a ‘remain’ result is not without cost to Britain and the EU

Wednesday’s Daily Brief: migration tragedy in the Rio Grande, drugs report, Torture Victims Day

Hiring more female leaders is good for profits. Here’s the evidence

Millions in Idlib ‘counting on your support to make the violence stop’, UN relief chief tells Security Council

More than half of world’s refugee children ‘do not get an education’, warns UNHCR

Mandela, ‘true symbol of human greatness’, celebrated on centenary of his birth

The vicious cycle of poverty and exclusion spreads fast engulfing more children

‘Terror and panic’ among Rohingya who may be forced to return to Myanmar – UN rights chief

UNICEF welcomes Bangladesh statement that Rohingya will not be forced to leave

Cameron postpones speech in Holland

The EU responds to US challenges by fining Apple with €13 billion

5 things you need to know about creativity

What’s behind South Korea’s elderly crime wave?

The Swiss will pay dearly for voting out fellow Europeans

The 4 types of leader who will thrive in the Fourth Industrial Revolution

Use space technology to build a better world for all, urges UN chief

Ethiopian Prime Minister Abiy Ahmed wins Nobel Peace Prize

Things are bad and getting worse for South Africa. Or are they?

Can the banking union help Eurozone counter its imminent threats?

Now’s the time to take up cycling – here are 6 reasons why

Look no hands: self-driving vehicles’ public trust problem

This Indian school accepts plastic waste instead of fees

Sudan: UN rights chief alarmed over ‘excessive force’, alleged use of live fire against protestors

Guterres: Security Council’s African alliances ‘needed and appreciated more than ever’

Afghanistan probe: ‘at least 60 civilians’ killed after US military airstrikes on alleged drug labs

Here’s how to build energy infrastructures fit for the future

Politics needs to “Youth UP” in order the ensure the future of our democracies

Governments need to honour their climate pledges as risks grow

A Sting Exclusive: “Regional Policy: a fully-fledged investment policy”, Commissioner Cretu reveals live from European Business Summit 2015

How to unleash the enormous power of global healthcare data

Opening – EP remembers Nelson Mandela and mourns attacks on Roma in Ukraine

A day in the life of a refugee: the wait

Scotland and First Minister Salmond enter the most challenging battlefield for independence: Europe

Parliament names radio studio after journalists murdered in December attack

A quarter of Americans have no retirement savings

Everyone’s ‘buy-in’ needed to restore peace in Kosovo, UN envoy tells Security Council

EU-US resume trade negotiations under the spell of NSA surveillance

Make this the year of ‘transformative solutions’ to avert disastrous climate change: UN Deputy Chief

Wednesday’s Daily Brief: World Breastfeeding Week kickoff, Second Ebola death on DR Congo’s eastern border, UN chief lauds climate activist Thunberg, Afghan bus attack, and outgoing UN agriculture chief hands over reigns

We’re all in the same boat on the SDGs. Here’s how we steer a course

Fairer food supply chain: Agriculture MEPs clamp down on unfair trading

More Stings?

Speak your Mind Here

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out /  Change )

Google photo

You are commenting using your Google account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s