Commission presents proposals to tackle tax avoidance

Faced with the Panama Papers scandal, Brussels had hardly any other option than “flex its muscles” and strengthen its tools to combat tax evasion, Le Figaro reports. Spiegel.de and El Pais also say that the Commission has ramped up its planned regulation in the wake of the Panama Papers scandal with a last-minute addition to the proposal that will see multinationals not only issuing a country-by-country report for every EU state in which they do business, but also for any country featured in a blacklist of tax havens to be released in six months’ time.

But FAZ quotes Commissioner for Financial Stability Jonathan Hill insisting that “the Panama Papers did not change our agenda, but they show how pressing the fight against tax evasion is.” The proposal, targeting companies with a turnover above €750 million, will now have to make its way through the European Council and Parliament. EU officials presented the proposals in interviews with EU media. In a guest commentary in Spiegel.de, Vice-President Dombrovskis and Commissioner Hill present the measures.

The European Commission wants to increase transparency for the tax deals of big corporations. All multinationals operating in Europe must publish in which countries they make benefits and in which countries they pay taxes. In an interview with lemonde.fr, Commissioner Moscovici explains the European Commission’s project for country by country reporting by multinationals, presented on 12 April, and says “The transparency revolution has begun, it will not stop.” The directive does not propose sanctions at this stage; that will be the subject of the EU black list of tax havens, he explains, adding that the objective is to, within six months, have set the objective criteria for classifying countries in this list, and to appropriate sanctions.

Some say the measures do not go far enough. The Guardian features an editorial arguing that the proposals will not go far enough. Spiegel.de quotes critics stating that the measures do not go far enough, with MEP Sven Giegold (Greens) claiming that the European Commission still allows corporations to keep assets in Switzerland or the USA hidden. Le Figaro also quotes NGOs who say it is “a howl at the moon,” as multinationals will hide their profits in non-EU countries which do not belong to the tax havens list, like Switzerland for instance. Salzburger Nachrichten quotes Austrian MEP Michel Reimon (Greens/EFA) who calls the plans “completely insufficient“. He believes that companies ought to make all financial data public. If they only have to publish data about profits, the tax burden and the number of employees the term reporting duty would be “inflated.” Spiegel.de quotes some who demand that the threshold of €750 million be lowered, but the European Commission states that only companies above that threshold are capable of creating offshore companies.

In a commentary in Der Standard, Gerald John says that making corporations disclose their profits alone cannot stop them from making use of tax loopholes. The initiatives launched so far did not go far enough or were not implemented quickly enough. According to Mr John, it is disappointing that the European Commission did not make use of this opportunity – instead the rules stay the same, which benefits the corporations. In L’Echo, tax lawyer François Parisis also fears that the new measures will not destroy all forms of tax evasion. He argues that those who want to slip through the net will still be able to do so.

Others say the measures will create a disadvantage for EU companies. FAZ and Le Figaro quote the European industrial sector (the Federation of German Industries (BDI) in FAZ) criticising that the planned regulation could make European industry less competitive. In a leading article in Handelsblatt, Torsten Riecke calls for a standard of privacy for international assets, expressing his concern about what he views as a collective overreaction to the Panama Papers. Mr Riecke says that instead of distracting the public with offshore accounts, states like Germany and the UK should do more to fight the significant amount of tax evasion at home.

Among positive comments, Radio Euskadi talks to Mario Weitz, a former member of the IMF’s executive board and currently an adviser to the World Bank, who praises the scheme, but adds that we should draw a line to differentiate multinationals from the Panama Papers revelations and tax havens. Salzburger Nachrichten quotes Austrian MEP Othmar Karas (EPP) who welcomes the current European Commission proposal, as do MEPs Angelika Mlinar (ALDE) and Evelyn Regner (S&D).