The Panama Papers scandal has put political pressure on the European Commission to toughen its tax laws related to country reporting by multinational companies, EU Economic and Financial Affairs Commissioner Pierre Moscovici has said.
Moscovici was speaking to journalists in Brussels as he unveiled a series of reforms to EU VAT rules, but the press conference was dominated by the unprecedented leak of 11.5 million files from Panama-based law firm Mossack Fonseca.
The Panama Papers exposed offshore companies used to avoid tax, and has embroiled public figures including Vladimir Putin, Ukrainian President Petro Poroshenko, David Cameron, Icelandic Prime Minister Sigmundur Davíð Gunnlaugsson, and Climate Commissioner Miguel Arias Cañete.
Moscovici said on Thursday (7 April), “Panama Papers left me outraged and furious. We do not yet know how much of this activity was illegal but much of it was certainly […] immoral, unethical and, in one word, unacceptable.
“The amounts of money, the jurisdictions and then names associated with this affair are frankly shocking.”
He said that non-cooperative jurisdictions were tax havens, which needed to be put on a EU tax haven blacklist. The list would be ready in six months and havens would be hit with sanctions, he said.
“Public opinion , the people, are fed up with these outrageous practices,” he said.
CRUNCH MEETING ON PUBLC REPORTING
Global companies can exploit their network of subsidiaries and favourable tax regimes in different countries to minimise the tax they pay.
Moscovici said there was huge public pressure to unmask the tax avoidance of multinationals, which drain revenue from the coffers of governments, driving up payments for citizens and smaller businesses.
The College of Commissioners is set on Tuesday (12 April) in Strasbourg to discuss planned EU measures to make companies report their profits and taxes paid in each country they operate in.
The draft laws, planned as part of proposed revisions to the Accountancy Directive, go further than the global Base Erosion and Profit Shifting (BEPS) rules agreed by the Organisation for Economic Cooperation and Development.
Under BEPs, the data reported is not made public. According to leaked documents, the European Commission plans to make the data public but only for activities and profits in the EU.
Data for subsidiaries outside the EU would be aggregated and anonymised under the draft plan, which would be weaker than the EU’s reporting rules for banks.
MOSOVICI WANTS TO GO FURTHER
But Moscovici hinted that the Panama Papers scandal could motivate the Commissioners to go further on country by country reporting than BEPS, and further than in the leaked documents.
“If at all possible we should go further on public country by country reporting,” he said, adding that “public opinion, normal people are right behind us on this. That is what they are looking for.”
Moscovici said he would not pre-judge what would happen at the meeting of the College of Commissioners.
“But I assure you in today’s circumstances, the Commission certainly does not intend to fall short of the action required,” he added.
EurActiv exclusively revealed that European Commission President Jean-Claude Juncker backed public reporting, provided studies showed it would not harm economic competitiveness.
Utrecht / Haaksbergen, 8 april 2016