Minimum sanctions for tax crimes, a cross-border tax identification number, an EU tax-payer’s charter and stronger common measures against tax havens. These are among ideas that the European Commission put forward to improve the fight against tax fraud and evasion in the European Union.
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 one fifth of GDP on average across member states, representing nearly €2 trillion in total. Given the globalisation of the economy and technological advances, it is clear that isolated national efforts to overcome this problem will not work, the EC says. The EC sets out a three tier approach .
National level
Member states should focus on improving their administrative capacity to collect taxes, as was clearly set out in the Country Specific Recommendations (see IP/12/513). The Commission will monitor closely their progress in this field, while also providing technical assistance where needed. 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.
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 add to such cooperation and common tools. In this respect, agreement by Member States on the revised Savings Directive is essential. Ideas 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.
It is stressed that 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 deal with aggressive tax planners.
Background
At the March 2012 European Council, Member States 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”.
Next
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.
Links
The Commission’s Communication can be found on:
http://ec.europa.eu/taxation_customs/common/publications/com_reports/taxation/index_en.htm
