The leak of the Panama Papers intensifies the debate on tax fairness and actions individuals and companies take to avoid taxes. Although, unlike tax evasion, tax avoidance is legal, policy makers are now looking how to prevent companies from avoiding taxes by stalling their money in tax havens.
The European Parliament is seeking to establish a new, possibly permanent, committee of Inquiry to investigate the “Panama Papers”. The revelations could result in even greater powers for European politicians to bring public attention and single out some companies for greater scrutiny. For instance, during hearings MEPs, especially from S&D and Green groups, grilled European banks just a day after the publication of the Papers on their involvement in possible tax evasion or avoidance by facilitating transfers of client funds to offshore companies.Member States are also becoming less reluctant to act together in the taxation area. The “Panama Papers” triggered a number of statements by Heads of State promoting the fight against evasion. European Commission’s proposal of 12 April on the public Country by country reporting on tax related manners comes in as a well-timed response to the Panama Papers scandal.
In this snapshot FTI Consulting’s Financial Services and Tax Advisory teams are looking how the legislative proposal on public tax reporting could help to tackle the issue of tax evasion and how it could impact business.
Joost Koomen is senior director and Kristina Budrytė-Ridard is senior consultant in FTI Consulting’s financial services team.