The EU Parliament voted to launch a tax inquiry into financial crime, tax avoidance, and tax evasion in early February, reportedly in response to revelations in the Paradise Papers. The inquiry, named Taxe 3, will comprise a special committee of members of the European Parliament (MEPs).
“The Paradise Papers showed that there is clearly unfinished work to do if we are to secure tax justice in Europe. We want to make sure that national treasuries are able to collect the money that is needed to build shared prosperity across Europe,” Philippe Lamberts explained. Lambert is the co-president of the Greens-European Free Alliance political group, which lobbied for the special committee.
The Taxe 3 committee will build on the work of the Pana committee. The Pana committee was established in the aftermath of the Panama Papers, with the remit of investigating money laundering and tax evasion following the papers’ leak. The committee reported its findings in December 2017.
The new committee is anticipated to spend one year investigating the various issues that the Paradise Papers revealed, notably focusing on tax evasion and tax avoidance in the digital economy, as well as value-added tax fraud. It will also focus on assessing how well the various EU member states are progressing in removing or cracking down on the various loopholes and practices that facilitate tax evasion and avoidance.
Interestingly, there has been speculation that the inquiry is likely to affect the UK, in particular. The inquiry’s terms of reference note that, “particular attention shall be given to the crown dependencies and overseas territories.” Experts say a UK tax loophole known as the “non-dom” loophole – in which wealthy individuals are able to avoid certain tax obligations by claiming that they reside outside of the UK – is likely to receive particular attention.
The results of the Taxe 3 investigation are expected to be available within a year.
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