Paradise Papers: MEPs call for permanent committee of inquiry into tax dodging

Written by Martin Banks and Julie Levy-Abegnoli on 7 November 2017 in News
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MEPs from across the political divide have called on member states to take more action to fight tax evasion following the Paradise Papers revelations.

MEPs have voiced their anger at yet another tax evasion scandal | Photo credit: Fotolia


MEPs from across the political divide have joined forces in calling for action following revelations in the Paradise Papers, a huge leak of financial documents that is throwing light on the world of offshore finance.

The deputies said the papers “show how the super-rich and multinationals have used lawyers to implement tax avoidance schemes which enable money to be moved around the globe undetected and untaxed.”

MEPs have now called for a permanent committee of inquiry into such tax dodging.


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The papers are a huge batch of leaked documents mostly from offshore law firm Appleby, along with corporate registries in 19 tax jurisdictions, which reveal the financial dealings of politicians, celebrities, corporate giants and business leaders.

The 13.4 million records were passed to German newspaper Sueddeutsche Zeitung and then shared with the International Consortium of Investigative Journalists (ICIJ).

Among those highlighted is Apple, the world's most profitable firm, which is said to have a secretive new structure that would enable it to continue avoiding billions in taxes.

The Paradise Papers reveal how Apple sidestepped a 2013 crackdown on its controversial Irish tax practices by actively shopping around for a tax haven.

It is then said to have moved the firm holding most of its untaxed offshore cash, now $252bn, to the Channel Island of Jersey.

On Monday, the issue was debated by Parliament's economic and monetary affairs committee, which voted in favour of a report by Greens/EFA group MEP Eva Joly on countering money laundering by criminal law.

The proposal for a directive aims at strengthening and harmonising the definitions and penalties for money laundering across all 28 member states.

Speaking after the vote, Joly said, “As our investigation into the Panama Papers has made clear, differences in national legislation as regards money laundering are an obstacle to cross-border cooperation. Harmonising and reinforcing definitions, cooperation and sanctions across all member states would be an important step in the fight against these sorts of crimes.

“This is particularly relevant in light of the recent revelations of the Paradise Papers. We suggest making the fact that the offence was committed by politically exposed persons (PEPs), such as MPs or members of governments and international organisations, an aggravating circumstance.”

The French deputy added, “Impunity for tax evasion and money laundering must end. The measures proposed today could go a long way in helping the fight for tax justice.”

Parliament’s biggest group, the EPP, has demanded blacklists of tax havens and places used for money laundering.

German EPP group deputy Burkhard Balz said, “Normal citizens and companies pay taxes. The new leaks show once again the organised, large-scale lack of responsibility of some who do not want to contribute to common welfare.

“Only much stronger cooperation, both within the EU and on an international level, can prevent tax evasion and money laundering. The new leaks also raise a lot of questions about certain EU member states.”

The EPP group wants work on the two planned blacklists of tax havens and places used for money laundering to be speeded up.

Another EPP group member, Dariusz Rosati said, “We must make sure that these blacklists come with objective criteria and with sanctions that motivate the listed countries to get off the list. The goal of such lists is not to punish, but to change the behaviour of such jurisdictions and prevent tax fraud.”

He added, “A thorough assessment of the information contained in the new leaks needs to be done first.”

S&D group Vice-Chair Jeppe Kofod, who was Parliament’s co-rapporteur on the Panama Papers committee, said, “It's clear that we need a new structure in the European Parliament to get to the bottom of these deeply worrying revelations. We have done a tremendous amount of work in the Panama Papers committee, but it is obvious that our work is far from done.

“The most horrific revelation is, that most - if not all - of these structures are technically legal. This shows the urgent need for international tax reform, starting with harsh sanctions for those who use, design or profit from aggressive tax planning and tax evasion schemes.

His group colleague Pervenche Berès added, “Our efforts are undermined by the fact that any tax decision requires the unanimity of the member states. There is still strong resistance from some EU capitals to moving forward on tax policy.

“If we want progress on increasing corporate tax transparency, on a common European corporate tax system or on a common European list of tax havens, member states need to abandon the unanimity rule on tax policy. Otherwise we will keep seeing new seasons of the Paradise Papers soap opera."

The ALDE group’s Petr Ježek, co-rapporteur on the Panama Papers committee, commented, “The borderline between tax optimisation and tax evasion is a narrow one. That is why we need, for example, a common definition of tax havens and a clear definition of what is tax optimisation and what is actually tax evasion or avoidance, in order to tackle those issue.

“With a view to the ongoing review of the anti-money laundering directive, we call on the Council to make progress on the issue of the transparency of beneficial ownership. The European Parliament advocates a fully public register of beneficial owners also for trusts. The Paradise Papers provide yet another reason to step up these efforts, in order to achieve greater transparency.”

GUE/NGL group MEP Matt Carthy called for more decisive action on a global scale, saying, “We need the toughest possible legislation on regulating the enablers and promoters of tax avoidance and tax evasion schemes.

“The EU, which is currently working on such a proposal, needs to take note of where similar legislation has been put in place and failed, and avoid similar mistakes”

“We need the swift and full implementation of all aspects of the anti-money laundering directive, and for member states to support strengthening the requirements on beneficial ownership.

“Beneficial ownership registries which name the flesh-and-blood owner of the account need to be public,” he said.

About the author

Martin Banks is a senior reporter for the Parliament Magazine

Julie Levy-Abegnoli is a journalist for the Parliament Magazine

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