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5th Feb 2023

EU seeks quick deal on tax transparency

  • Cahuzac: an estimated €1 trillion is lost to tax evasion each year (Photo: Parti socialiste/Mathieu Delmestre)

The EU is hoping to reach agreement on automatic exchange of data on overseas bank accounts, according to a letter sent to national capitals on Wednesday (24 April).

A letter from Irish finance minister Michael Noonan and EU tax commissioner Algirdas Semeta, sent to national capitals, called on governments to agree on automatic information exchange and tax savings rules.

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Ireland, currently holding the EU presidency, wants to a deal by the end of June.

The letter said "concrete action at EU level would signal our collective intent, which is essential in tackling transnational tax fraud, tax evasion and aggressive tax planning."

Dublin is also keen to open talks with European micro-states including Liechtenstein, Monaco, Andorra, San Marino, as well as Switzerland, aimed at aligning bilateral tax agreements with EU law.

The subject will top the agenda when EU leaders gather in Brussels for a summit in May.

Austria is now the last EU country to oppose EU legislation requiring banks and governments to exchange data on overseas bank accounts held by their citizens.

Clamping down on tax fraud and evasion has climbed the political agenda after the "offshoreleaks" revelations by the International Consortium of Investigative Journalism (ICIJ) in Washington revealed the true scale of tax revenues lost to evasion and avoidance.

A report prepared for the European Commission by Richard Murphy, the director of Tax Research UK, a think tank, estimated that EU governments lose around €1 trillion each year to tax evasion, a higher amount than governments spend on healthcare across the 27-country bloc.

The issue has also risen to prominence in France where former budget minister Jerome Cahuzac is facing fraud changes over his undeclared Swiss bank account.

MEPs and EU governments recently agreed on new rules requiring banks to disclose how much tax they pay on a country-by-country basis.

For his part, UK Prime Minister David Cameron sent a letter to the commission on Wednesday calling on governments to “break through the walls of corporate secrecy” by making information on the beneficial ownership of companies available in public registries.

“A lack of knowledge about who ultimately controls, owns and profits from companies leads to aggressive tax avoidance, tax evasion and money laundering, undermining tax bases and fuelling corruption across the world,” he said.

Meanwhile, on Tuesday, Semeta announced the launch of a tax governance platform to monitor national government policies tackling tax evasion and clamping down on tax havens.

He told reporters that the regime was an attempt to "protect the fairness of our tax systems."

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