Claude Moraes, MEP, explains how the European Union is taking the lead in tackling tax dodging by multinational companies and international money laundering. Steps which cannot be achieved by national governments operating on their own.
On 12 April, the EC announced new proposals – based on a Labour report approved by MEPs in 2015 – to tackle tax dodging by multinational corporations, including public country-by-country reporting and a common list of tax havens.
This is an excellent example of the EU proving its value and is a huge step forward in the fight against tax avoidance and evasion. By requiring companies to declare where they make their profits and how much tax they pay in each EU country, we can force them into playing by Europe’s rules. The list of tax havens will ensure greater transparency: all activity will need to be disclosed.
In the coming months, the European Parliament’s Civil Liberties, Justice and Home Affairs Committee, of which I am Chair, will review the EU Anti-Money Laundering directive. One of the most crucial aspects of the directive, which was adopted last summer by the European Parliament, is that it introduces central registers, to be held by all EU countries, of the beneficial ownership of companies and trusts. The registers will not only help in the fight against money laundering, but will also be vital in the ongoing fight against tax evasion and aggressive tax avoidance, and will help small businesses that are unable to hide behind complicated structures.
London is a major centre for international money laundering, which can’t be tackled by national legislation alone. The EU legislation, which the UK has opted in to, is a positive step in the battles against corruption and the financing of serious organised crime, including terrorism. It brings the EU into line with international standards while, at the same time, guaranteeing fundamental rights for EU citizens.
Sharing information across the EU makes it harder to shift profits to low- or no-tax jurisdictions, or to avoid paying tax altogether. Companies will have to report information, such as revenue, profit or loss before tax, tax paid and tangible assets, for each jurisdiction in which they operate. More needs to be done, but the EU is taking a lead in tackling tax avoidance – now it’s up to ministers, particularly in our own government, to ensure an end to tax dodging by supporting the Commission’s proposals.