Reacting to the revelations of the Pandora Papers, the biggest ever leak of offshore papers, in which the International Consortium of Investigative Journalists exposes the secretive financial dealings of more than 100 billionaires and 30 world leaders, the Socialists and Democrats in the European Parliament call for a crack-down on tax abuse. The EU needs qualified majority voting in the Council on tax matters, reform of the Code of Conduct on business taxation, tougher criteria for tax havens and robust sanctions, as well as increased transparency to tackle financial crime and tax avoidance more effectively. The European Parliament will debate and vote on a report this Wednesday on combatting harmful tax practices by MEP Aurore Lalucq, S&D spokesperson on tax matters.

Iratxe García Pérez, S&D Group leader, said:

“While we are trying to find ways to pay for the recovery from the pandemic, the Pandora Papers shockingly reveal the true costs of the shadow financial system. While some of the world’s richest people pay little or no taxes, we lose trillions of euros due to tax avoidance and evasion. Money we urgently need to combat growing inequalities in our societies and build a better future for all. This injustice must stop. We are calling to advance to qualified majority voting in the Council on tax matters. It is unacceptable that political leaders involved in such practices have the power to veto tax justice and transparency.”

Jonás Fernández, S&D MEP and spokesperson for economic and monetary affairs, said:

“The Pandora Papers again prove that the fight against money laundering and tax avoidance will only ever succeed if we increase transparency. The complex ownership structures of the hidden financial system of tax avoiders, tax evaders and money-launderers prospers on secrecy. We need to know who really owns companies and trusts, and their dealings. This is why we propose to continually increase public access to information concerning beneficial ownership of corporations and trusts. We have widely established this standard for EU companies, but now we need to extend it to companies based outside the EU as well. A shell company in the British Virgin Islands should not be able to purchase property in the EU without revealing its beneficial owner.

“The exchange of information between financial intelligence units tracking suspicious transactions must be stepped up. We will work on the recent Commission proposals to make sure that the new anti-money-laundering authority can greatly enhance co-operation and joint investigative capacity.

“We  also continue to push for better regulation and supervision of all the intermediaries, like wealth managers, law firms, company formation agents and accountants, that design and enact these complex schemes involving shell companies in several tax havens to shield wealth and assets from scrutiny. The impunity cannot continue.”

Aurore Lalucq, S&D MEP, spokesperson on tax matters and author of a report on harmful tax practices voted this week in the European Parliament, said:

“The Pandora Papers again shockingly illustrate the pivotal role tax havens play in the hidden operations of the global shadow financial world, enabling the world’s richest people to hide their wealth and ditch their tax responsibilities. I hope that the Pandora Papers will finally be a loud enough wake-up call for EU leaders and the Commission to push them into action. The EU’s main tool for combatting harmful tax practices, the Code of Conduct for business taxation, urgently needs to be reformed to become a sharp tool to fight tax abuse.

“In my report, we urge EU leaders to finally give the EU tax havens list teeth. Including a minimum level of economic substance as a criteria for what constitutes a tax haven, as well as tough sanctions. This is port of our FATAL - "Framework on Aggressive Tax Arrangements and Low-Rates" - proposal. Some of the world’s most notorious tax havens are not even listed by the EU and tomorrow EU finance ministers are set to let even more off the hook. Sadly, the countries that remain black-listed do not represent the most important financial flows.

“To combat tax abuse by some of the richest and most powerful individuals of the world, the scope of the Code of Conduct must finally be enlarged to include preferential personal income tax regimes designed to attract these highly mobile wealthy individuals.

"We need to know exactly who is asking for what in the Council, especially if some ministers are involved in tax evasion scandal. Full transparency is needed more than ever."