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More European cooperation to fight tax evasion and stamp out loopholes
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Minimum sanctions for tax crimes, a cross-border tax identification number and stronger common measures against tax havens. These are ideas that the Commission has put forward to EU leaders meeting this week. This comes at a time when tax evasion and avoidance is a high-profile political issue in the UK. The measures the Commission advocates would help the UK and all other Member States to collect more tax revenue.

Algirdas Šemeta, Commissioner for taxation, customs, anti-fraud and audit, said:
"Let there be no illusion: tax evaders steal from the pockets of ordinary citizens and deprive Member States of much-needed revenue. If we want fair and efficient tax systems, we must stamp out this activity. The political will to intensify the battle is there. Now it is time to translate that into action. As a Union of 27, we have a powerful advantage - strength in numbers. If we play as a team, with a common strategy, we can defeat the fraudsters and evaders, and reclaim vast sums of money that are legitimately due."

The size of the shadow economy is estimated to be nearly 20% of GDP on average across Member States, representing nearly €2 trillion in total. The estimated figure for the UK is 10.5% of GDP. Given the globalisation of the economy and technological advances, it is clear that isolated national efforts to overcome this problem will not work. Therefore, the Communication sets out a three-tier approach aimed at attacking evasion and fraud from every possible angle.

    Algirdas Šemeta, Commissioner for taxation

    Algirdas Šemeta, Commissioner for taxation

    National level
    Member States should focus on improving their administrative capacity to collect taxes. National authorities should also make it easier for the willing to comply, for example, through voluntary disclosure programmes. EU instruments such as the one-stop-shop (see IP/12/17) and a possible Tax Web-Portal should also assist better compliance.
    The Commission document stresses that Member States have full sovereignty over the collection of their taxes, the functioning and consistency of their tax laws and tax administrations, tax collection and the fight against tax fraud.

    EU level
    Action to tackle tax evasion at European level has proven to be effective. Thanks to the EU Savings Directive, for example, Member States exchange information on non-resident tax-payers to the value of €20 billion. The challenge now is to deepen such cooperation and strengthen common tools. In this respect, agreement by Member States on the revised Savings Directive is essential. In addition, a number of new ideas are presented. These include a possible European cross-border tax identification number, a quick reaction mechanism for VAT fraud and minimum EU rules and sanctions for fraud and evasion.

    International

    For the fight against tax evasion to be truly effective, international partners must apply good governance standards that are equivalent to the EU's. The mandates that the Commission has requested to negotiate stronger savings agreements with key neighbouring countries are crucial in that respect. Before the end of 2012, the Commission will also set out a "stick and carrots" approach to dealing with tax havens, and measures to combat aggressive tax planning.

    Background

    In  March 2012 European Council, EU leaders asked the Commission "to rapidly develop concrete ways to improve the fight against tax fraud and tax evasion, including in relation to third countries and to report by June 2012". Today's Communication will be submitted to the EU Summit on 28-29 June.

    Next Steps
    The Commission will start work on developing the ideas set out in today's Communication. Before the end of the year, it will present an Action Plan on fighting fraud and evasion, with specific measures that could be rapidly developed. In tandem, the Commission will also come forward with its initiative on tax havens and aggressive tax planning.

      

    For more information, please contact the London press office on 020 7973 1971.
    Please note: all amounts expressed in sterling are for information purposes only.

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    Last update: 27/06/2012  |Top