European Parliament votes for a tax haven blacklist and better support for whistleblowers
Members of the European Parliament have today voted through measures to make corporation tax fairer, which include drawing up a blacklist of tax havens.
Proposed punishments for appearing on the list of so-called uncooperative jurisdictions include reviews and potential suspensions of free trade agreements and prohibiting access to EU funds.
Sanctions were also proposed for companies, banks, accountancy and law firms and tax advisers which are proven to be involved in "illegal, harmful or wrongful activities" involving such jurisdictions.
"Tax dumping is done at the expense of the general public and small- and medium-sized companies, which are the backbone of our European economy," said Michael Theurer, an officer of the European Parliament's special committee on tax rulings II. "In a fair tax system, multinational companies also pay their share and they should do so where they add value and make their profits"
Jeppe Kofod, another officer of the committee, added: "We’re setting clear demands for increased accountability, effective deterrents in the form of markedly increased sanctions for tax havens, banks, tax advisors and companies, and we’re calling for increased European and international cooperation on this hugely problematic issue."
Other recommendations on the MEPs' fairer tax wishlist included better protection of whistleblowers, a code of conduct for tax advisers and clearer rules on transfer pricing.
The proposals were approved by 514 votes to 68, with 125 abstentions.
Public sentiment towards tax havens has soured significantly as of late, as the outraged sparked by the Panama Papers report revealed.
The leak of data from Panama-headquartered law firm Mossack Fonseca exposed widespread use of offshore entities in low tax jurisdictions and implicated over 100 politicians and public officials from around the world.
The release of the report left David Cameron red faced as he confessed in an ITV interview that he had once had a stake in the offshore trust of his late father.
Prior to the Panama scandal, Google also managed to hit a nerve with the public after it struck a so-called sweetheart deal with HM Revenue & Customs for £130m in unpaid corporation tax.
Representatives from the technology giant were later hauled in front of MPs to defend the company's practice of setting up entities in low tax jurisdictions.
Protection of whistleblowers may well be on people's minds as well, after two ex-accountancy firm employees were found guilty over their roles in a data leak that revealed how hundreds of companies had been booking their business through Luxembourg and lowering their tax bills as a result.