European Union: Automatic Information Exchange and CbC are the way forward
"the automatic exchange of data seems to be the most effective way of communicating the current information required for accurate taxation, in particular in cross-border cases."
Now the original text emerging from the European Commission mentions automatic exchange of information, but it effectively treats other forms - "spontaneous" and "on-request" exchange of information as being no different.
And this next document gets better, looking at the EU's existing system of automatic information exchange between countries and calling it
"a welcome step towards the establishment of a global framework for automatic information exchange; welcomes, accordingly, the Commission's proposal to promote cooperation with third countries.
. . .
the EU should actively promote the improvement of the OECD standards, with the aim of making the automatic, multilateral exchange of information the global standard"
Now that last sentence is quite something. We like this, too:
"The General Anti-Avoidance Principles (GAAP) gives tax authorities the power to consider whether the main purpose of a particular transaction is the avoidance or reduction of tax liability and, if so, to levy additional tax in order to counteract such avoidance or reduction.
(Some practitioners call this GAntiP, instead of GAAP, to avoid confusion with another term that stands for Generally Accepted Accounting Principles - read more about the importance of this principle here)
We are also pleased to see the European Parliament noting the links between tax havens and the financial and economic crisis:
"There is evidence that the financial crisis was driven partly by new types of complex financial instrument and derivative placed, to a large extent, in funds domiciled in secrecy jurisdictions; whereas tax havens host, for example, complex financial products that cause financial instability, and many financial institutions had off-balance-sheet liabilities located in tax havens; whereas overall the financial crisis has shed new light on the consequences of a lack of good governance, highlighting the risks associated with opaque jurisdictions."
All in all, good progress. These documents are not binding, mind, but they will put crucial pressure on the European Commission, and particularly its rather conservative tax directorate, to move forwards on this.
There is plenty more good stuff in here:
"(the European Parliament) urges the EU, furthermore, to adopt measures that prevent abuse of the "residence principle" through artificial domicile and ownership schemes allowing holding companies with no activity or shell companies to shield beneficial owners from paying taxes in their country of domicile."
And a recognition that
"tax fraud . . . leads to an annual loss of tax revenue corresponding to 10 times the amount of development aid injected by developed countries
. . .
tax fraud and tax evasion and has serious consequences for national budgets and the European Union's resource systems, with the cost in the EU estimated to amount to 2.5 % of GDP per annum;"
"Stresses the need to revise current international accounting standards with the aim of increasing transparency; calls in this regard for a requirement for the disclosure in companies" annual accounts, on a country-by-country basis, of accounting information relating to tax havens, and suggests an EU public register listing the names of individuals and undertakings having set up companies and accounts in tax havens, with a view to unveiling the true beneficiaries shielded by offshore companies."
And more. We are, finally, heartened to see, as this German-language newspaper article notes, that the amendments were approved by a margin of 561 votes in favour, versus 97 against.