Policy recommendations

  • The European Savings Directive needs to be extended by the European Member States. The automatic exchange of information should include companies and trust funds as well. This creates the opportunity to get information on MNCs as well as individuals, and it would make it more difficult to evade taxes.
  • The European Commission should be mandated to impose strict penalties on Member States which do not comply with good governance in tax matters, like the Member States that still support tax havens on their territories.
  • The European Union, on behalf of the Member States should oblige country-by-country reporting for MNCs enlisted in the EU.
  • The European Union should oblige MNCs to disclose the beneficial ownership, which would create transparency on transfers between companies, and increase the chance of ending transfer pricing.[28]

Case: Fair Taxes

24-02-2011 MEP Kratsa-Tsagaropoulou asks questions on Tax Havens

The focus of development cooperation is usually on the amount of money transferred as aid from the North to the South. However, a tremendous amount of money is leaving developing countries in the form of illegal financial flows corresponding to 10 times the amount of injected development aid from developing countries. Thus, on one hand the EU is supporting developing countries by its development policy and aid programmes, but on the other hand the EU and in particular its Member States are enabling corporations to escape their tax responsibilities in developing countries. This is a flagrant case of incoherent policy as you can also read in our case on Fair Taxes.

As MEP Rodi Kratsa-Tsagaropoulou (EPP) notes the existence of tax havens hinder the economic development in poor countries and encroaches the sovereignty of other countries, harming the efficiency of financial markets and of resource allocation. She asks the Commission how tax havens can be tackled and what the position of the Commission is when it comes to stricter criteria for identifying tax havens. The OECD definition on tax havens is rather weak. In the light of the OECDs definition, there are 40 countries considered as tax havens. However these countries have all disappeared from the OECDs blacklist, because they promised to become more transparent and introduce exchange of information. Other sources, like the Tax Justice Network, actually recognise over 70 tax havens world wide. In the EU, Ireland, Belgium, Luxembourg and the Netherlands are the main tax havens. Other EU countries have offshore islands that are used for the same reasons, examples are Jersey and the Cayman Islands.

We would like to thank MEP Kratsa-Tsagaropoulou for asking this question on the incoherence between the EUs tax policy and its development policy.

Monitor fair: EPP

Parliamentary question
E-001342/2011
8 February 2011
WRITTEN QUESTION, by Rodi Kratsa-Tsagaropoulou (EPP)

Subject: Dealing with tax havens
The existence of tax havens, as the European Parliament emphasized in its resolution of 25 March 2010, is an insurmountable hindrance to economic development in poor countries and encroaches on the sovereignty of other countries, harming the efficiency of financial markets and of resource allocation.
Moreover, since tax havens undermine national tax systems and increase the costs of taxation, create incentives to engage in economic crime, damage private income, good governance and economic growth, thus preventing developing countries from investing, will the Commission say:
1. How will it extend automatic exchanges of information world-wide, and encourage the imposition of sanctions against uncooperative tax havens and their users?
2. What is its position regarding the adoption of stricter criteria for identifying tax havens?
3. What progress has occurred in international cooperation in this area?