The mandate of the Committee of Inquiry into Money Laundering, Tax Avoidance und Tax Evasion (PANA) has been extended. Its remaining work on collecting information with regard to tax tricks by governments, large companies and rich individuals is due in December. However, the Committee’s first draft report, which summarises the most important results of the almost one-year-long investigations, has already been made available.
The PANA Committee of Inquiry had been confronted with a difficult but crucial task: to unmask the way tax avoidance and tax evasion strategies of major and rich players work and to shed some light in their necessary preconditions. A vast range of information has been collected during the course of the inquiry – for example by the means of numerous public hearings of invited guests and fact-finding missions in the Member States and the USA.
Rapporteurs Jeppe Kofod (S&D) and Petr Ježek (ALDE) have now summarised the most important results and loopholes in a first draft report. Their conclusion: much could have been avoided if the Member States had taken greater care to implement existing policies along the anti-money laundering directives. The European Commission too could have done more, such as making additional resources for combatting tax avoidance available. The rapporteurs agree – transparency needs to be at the heart of a successful fight against these practices.
The proposal on public country-by-country reporting, which had been adopted by Parliament last week, was regarded as an important milestone. In particular, countries of the Global South have been disproportionately affected by tax evasion; the annual losses of the entire African Continent are almost twice as large as the sum of all official development assistance flows. Independently from their vulnerability and interests at stake, countries of the Global South are hardly represented in the OECD, which makes it according to the rapporteurs ever more important to consider their particular disadvantage with regard to regulations at an EU level.
Financial intermediaries, i.e. banks, accounting firms, law firms, and so forth, are the necessary enablers of tax avoidance structures in the first place: EU intermediaries are responsible for 20 % of all structures uncovered in the Panama Papers. The majority originates from the United Kingdom, followed by Luxembourg and Cyprus. Hence, the Commission proposal, which deals with task-specific regulations of financial intermediaries, has been welcomed by both the Committee and its rapporteurs. However, whistle blowers also need better protection. The rapporteurs urge for an improvement in the cooperation among EU institutions. Whilst the Commission had made great efforts to respond to all requests of the Committee of Inquiry, some Member States had been far more reluctant to cooperate. Apart from that, many documents had been difficult to access or they had been greatly censored.
On July 11, the Committee also invited the German, Italian, Irish and Dutch Finance Ministers, who all emphasised how much had been done in favour of tax justice at a national level. Due to the fact that EU decisions cannot be adopted without unanimous decisions by the Council with regard to tax policy, the Member States remain the most important players in reaching respective agreements.
It remains to be seen how the final report of the Committee of Inquiry will finally look – should it be brave and include future guiding principles as was for example demanded in Parliament by the Greens/EFA and the GUE/NGL? Or is it rather to focus on the most important issues, as claimed by market liberal and Conservative parties? Hence, the negotiations remain exciting. And, there is also another upcoming fact-finding mission to Switzerland. There also needs to be a clarification of the construction of the Commission's planned EU-wide list of non-cooperating tax territories, which is thought of being settled by the end of the year. In the PANA Committee’s view, also Member States and their respective sovereign territories need to be on the list in case they fulfil the criteria of being a tax haven.