Sunday, December 5

Senior EU Official Calls For Cracking Down On Shell Businesses Used To Avoid Taxes | Pandora Papers

The EU should respond to the revelations of the Pandora documents with a new crackdown on the use of shell companies by tax evaders to ensure that the costs of the Covid recovery are shared fairly, the economy commissioner said. of the block.

Paolo Gentiloni, a former prime minister of Italy, praised the “meticulous” work of journalists around the world who he said had exposed how lawmakers were being outdone by those seeking to avoid paying taxes.

Speaking at the beginning of a debate in the European parliament, Gentiloni said the revelations, drawn from 11.9 million leaked files of companies hired by wealthy clients to create offshore structures and trusts in tax havens, required new legislation.

Fast guide

What are Pandora’s papers?


The Pandora documents are the largest treasure trove of leaked data exposing the secrecy of tax havens in history. They provide a rare window into the hidden world of offshore finance, shedding light on the financial secrets of some of the richest people in the world. The files were leaked to the International Consortium of Investigative Journalists (ICIJ), which shared access with The Guardian, BBC and other media outlets around the world. In total, the hoard consists of 11.9 million leaked files from a total of 14 overseas service providers, totaling 2.94 terabytes of information. That makes it larger in volume than the Panama Papers (2016) and the Paradise Papers (2017), two previous high seas leaks.

Where do Pandora documents come from?

The ICIJ, a Washington DC-based nonprofit journalistic organization, is not identifying the source of the leaked documents. To facilitate a global investigation, the ICIJ granted remote access to the documents to journalists from 117 countries, including reporters from the Washington Post, Le Monde, El País, Süddeutsche Zeitung, PBS Frontline and the Australian Broadcasting Corporation. In the UK, the investigation has been led by The Guardian and BBC Panorama.

What is an offshore service provider?

The 14 overseas service providers on the run provide corporate services to individuals or companies seeking to do business abroad. Typically, his clients seek to quietly establish companies or trusts in lightly regulated tax havens, such as the British Virgin Islands (BVI), Panama, the Cook Islands and the US state of South Dakota. Foreign registered companies can be used to hold assets such as property, airplanes, yachts, and investments in stocks and shares. By keeping these assets in an offshore company, it is possible to conceal from the rest of the world the identity of the person to whom they actually belong, or the “beneficial owner”.

Why do people move money abroad?

Generally for tax, secrecy or regulatory reasons. Offshore jurisdictions tend not to have corporate or income taxes, making them potentially attractive to wealthy individuals and businesses who do not want to pay taxes in their home countries. Although morally questionable, this type of tax evasion can be legal. Offshore jurisdictions also tend to be very secretive and publish little or no information about the companies or trusts incorporated there. This can make them useful for criminals, such as tax evaders or money launderers, who need to hide money from tax or law enforcement authorities. It is also true that people in corrupt or unstable countries can use offshore providers to put their assets out of the reach of repressive governments or criminal adversaries who may try to seize them or try to circumvent currency restrictions. Others may go abroad for inheritance or estate planning reasons.

Has everyone in the Pandora docs done something wrong?

No. Moving money abroad is not in itself illegal and there are legitimate reasons why some people do it. Not all the people named in the Pandora newspapers are suspected of wrongdoing. Those who are can be accused of a wide range of misconduct: from the morally questionable to the potentially criminal. The Guardian only publishes stories based on leaked documents after considering the public interest. That’s a broad concept that can include promoting transparency by disclosing secret overseas owners of UK property, even when those owners have done nothing wrong. Other articles can illuminate issues of important public debate, raise moral issues, shed light on how the offshore industry operates, or help inform voters about politicians or donors in the interest of democratic accountability.

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Gentiloni said: “The commission is preparing new legislative initiatives that will improve tax transparency and bring new elements under the umbrella of automatic information exchange to strengthen the fight against tax evasion and avoidance.

“This includes legislative proposals that we will present before the end of the year to address the misuse of shell companies for tax purposes. We all know from Pandora docs what key role these shell companies can play in tax evasion.

“These leaks demonstrate that we cannot be complacent and must continually work to further strengthen our arsenal against tax abuse.

“This is more crucial than ever as we work to move past the economic downturn and ensure that the costs of the crisis are shared fairly among taxpayers.”

Pandora’s documents, leaked to the International Consortium of Investigative Journalists (ICIJ) in Washington DC and shared with The Guardian, BBC Panorama, Le Monde and the Washington Post, among others, have revealed the secret offshore affairs of 35 world leaders, including the current ones. and former presidents, prime ministers, and heads of state.

Among those implicated was Andrej Babiš, the Czech billionaire prime minister, who is under pressure to explain an offshore structure he used to finance the purchase of a £ 13 million mansion in the south of France. Babiš has dismissed the revelations as part of a pre-election smear. “I don’t own any offshore, I don’t own any real estate in France, and all the money I loaned later I got back, so let the police investigate it,” he said.

Gentiloni did not mention the Babiš case, but urged all 27 member states to back the upcoming legislation, which was expected even before the scandal broke, and fully implement existing measures designed to detect tax evasion and aggressive tax planning.

He added that the EU executive would propose new rules “on the publication of effective tax rates paid by some multinationals.”

He said: “We have to take into account that tax evaders and evaders also develop new practices to circumvent existing measures and that economic actors are more mobile and faster than any legislature in the world.”

EU finance ministers have been criticized this week for removing Anguilla, Dominica and Seychelles from the bloc’s blacklist of tax havens on the grounds that, while “they still do not comply with all international tax rules,” ” they are committed to implementing good fiscal governance. ” principles ”.

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The EU list of tax havens now has nine jurisdictions blacklisted as “non-cooperative”: American Samoa, Fiji, Guam, Palau, Panama, Samoa, Trinidad and Tobago, US Virgin Islands and Vanuatu.

Gentiloni said he believed the blacklisting and the use of a gray list that alerts jurisdictions that they are being monitored was achieving results. “We have obtained legislative changes in several only through this process,” he said. “Progress is picking up … We will make it increasingly difficult for tax evaders to continue without paying their fair share.”

But in response to criticism from MEPs, he added that the criteria for inclusion in the blacklist, introduced in 2017, may need to be revised.

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