Tuesday, January 25, 2011

Fighting illicit financial flows: What next for Europe?

Last December our friends at Eurodad, CNCD and the global Task Force on Financial Integrity and Development organised a conference in Brussels to consider next steps for the European Union agenda on tackling illicit financial flows. The outcomes report of that conference is now available here.

The report provides much food for thought. It recognises that tax cheating is a global problem, impacting societies in both North and South, and therefore requiring systemic solutions. It also recognises that while there is plenty that southern countries could and should do to strengthen their own capacities for tackling these problems, many of the barriers to tax justice are rooted in systems designed and implemented by institutions that operate in the North: the OECD and the International Accounting Standards Board being prime examples.

But the European Union could be a key player in moving towards a cooperative international tax environment. Its savings tax directive has established automatic information exchange as an effective tool for countering evasion (and yes, we recognise the current deficiencies, its the principle that matters here). The Commission signalled in 2010 its interest in adopting a country-by-country reporting standard for multinational companies: you can read our submission to their review of this proposal here. It is also moving towards a relaunch of its Common Consolidated Corporate Tax Base, which is a step in the direction of dropping the OECD's fatally flawed 'arm's length standard' and replacing it with a method of sharing taxes on profits using a formula-based system for allocating them to the countries where they are genuinely created in the first place (more on this here).

This report explores these and other issues, laying out an agenda for progressive change that will not only work for European countries but can be extended to other countries, both North and South.

2011 offers exciting opportunities for campaign and advocacy work on these issues. This report will help you identify priorities and the appropriate avenues for advocacy effort.

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