The European Commission came up today with an anti-tax avoidance package aiming at clamping down tax dodging. The package makes it clear that the European Union needs to clean up its act on tax havens, starting from its own financial arm – the European Investment Bank (EIB).
The communication External Strategy for Effective Taxation recalls that European legislation prohibits EU funds from being invested in entities in third countries which do not comply with international tax transparency standards. Therefore, it calls on EU international financial institutions – namely the EIB and the European Investment Fund (part of the EIB group) – “to transpose good governance requirements in their contracts with all selected financial intermediaries”. The Commission also claims that the EIB needs to go further than the current transparency requirements to ensure fair tax competition.
It goes on by regretting that “in the past [it] has had to block certain projects submitted by the [financial institutions – meaning the EIB] because they involved unjustifiably complex tax arrangements through harmful or no tax regimes in third countries”. As a consequence, the Commission states that it will include more stringent tax good governance standards covering EIB operations in its reference legislation in the field – the so-called “Financial Regulation”.
Counter Balance welcomes those necessary measures announced by the European Commission.
Xavier Sol, Counter Balance director, says: “Now that the European Commission is putting pressure on the EIB to act, the EIB has no excuse for not doing more. It is the sole responsibility of the bank and its shareholders – the European Member States represented by the bank’s directors – to take necessary measures for the EIB to become a leader on responsible taxation. For the Union to put its own house in order, it should ensure that the EU’s Bank genuinely fights tax avoidance and tax evasion.”
Notes to editors
* Counter Balance’s report “Towards a responsible taxation policy for the EIB” published in April 2015 called on the EU’s public bank to grasp the political momentum at EU level to prevent any public money from flowing through tax havens.
The report highlighted several cases which show EIB funds have been granted to beneficiaries that allegedly used tax havens to increase their profits or to embezzle proceeds from corruption. It also listed several EIB investments in developing countries that run through tax havens. Therefore, Counter Balance asked the bank to update its current tax havens policy and adopt a real “Responsible Taxation Policy”.
* This position was supported in a resolution of the European Parliament in May 2015 which urged the bank to develop a responsible taxation policy that includes country by country reporting and the identification of the beneficial ownership of its clients.
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