EU Economic and Monetary Affairs Committee Will Create a Subcommittee to Investigate Tax Avoidance and Money Laundering
Tax avoidance and money laundering are controversial issues in the European Union and around the world. Recently, the Economic and Monetary Affairs Committee announced it will create a subcommittee dedicated to investigating these issues.
The Decision
The decision to create a subcommittee dedicated to investigating money laundering and tax avoidance came in the middle of September. It followed a proposal by the Greens-European Free Alliance that would establish a new body. The coordinators of the Economic and Monetary Affairs Committee officially decided to create such a subcommittee. According to the committee, the new subcommittee should be operational by the end of the year.
The Subcommittee’s Role
The role of the new subcommittee will be to investigate financial crimes in general. This includes tax evasion, tax avoidance, and money laundering. Experts are comparing this new subcommittee to the permanent subcommittee in the United States Senate that investigates illicit financial activities, including tax dodging.
Reasons for the Decision
According to Sven Giegold, one of the European parliament’s German Green Party members, the organization was setting up multiple committees. There seemed to be a new committee created following every scandal, and each time, they had to start over. By creating a permanent subcommittee, the organization can follow up on previous work instead of starting over repeatedly.
Example Inquiries of the Past
There are many examples in recent years of ad hoc inquiries and temporary committees created by the Economic and Monetary Affairs Committee in response to scandals. One of the most notable of these inquiries was formed in June 2016, following the release of the Panama Papers. This led to the creation of a committee that investigated tax evasion, money laundering, and tax avoidance. The committee published its report 18 months later and called for the creation of improved whistleblower protections and public registers featuring company owners.
The 2017 release of the Paradise Papers led to the formation of another inquiry, this time beginning in early 2018. That inquiry looked into financial crime.
Reactions to the New Committee
Proponents feel that the creation of a permanent subcommittee for tax evasion and financial crime will help Europe, as well as the rest of the world. Those in favor make similar points to those of Giegold, including that the committee will be able to get a head start on future investigations since it will not have to start from scratch. It will already have investigative expertise and essential information available.
The Dutch Are Also Making Changes
In addition to the new subcommittee in the European parliament, the Netherlands just proposed three new reforms in mid-September, all of which will affect its tax laws. These reforms come as a reaction to the criticism the country receives due to multinational companies paying no corporate tax or minimal tax on their profits.
For years, multinational companies have taken advantage of the Netherlands’ generous tax regulations, treating it as a tax haven. This has allowed them to avoid paying billions in taxes around the world. For example, Nike used the Netherlands and Bermuda to avoid paying its corporate taxes on billions of dollars of European income. Menno Snel, the Dutch state secretary, said the new proposals have the goal of fighting tax evasion and avoidance.
How It Affects You
For those who support tax havens and governments that offer dramatic tax discounts to multinational corporations, the formation of the new subcommittee may be alarming. Some opponents are concerned that it will limit their privacy. Those who comply with current tax regulations should not have anything to worry about. However, that may change if the presence of the committee encourages the EU to close tax avoidance loopholes.
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