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By Joe Kirwin
Oct. 7— Tough rules to regulate tax advisers, banks and lawyers who help companies avoid tax are set to be advanced by European Union finance ministers.
The Council of Economic and Financial Affairs Oct. 11 also will likely move toward a system of automatic exchange of beneficial ownership registers to better target opaque company structures through enhanced cooperation among EU tax authorities. Beneficial ownership registers now are compiled under the EU's Anti-Money Laundering legislation.
Measures to provide whistle-blower protections also are in the cards at the EcoFin meeting.
The plans to regulate tax advisers are set to include drafting EU regulations to adopt the Organization for Economic Cooperation and Development's base erosion and profit shifting plans— Action 12 in particular, which concerns the mandatory disclosure of aggressive tax planning schemes by tax advisers.
“These measures are considered key steps in the continued efforts by the European Union to fight against tax evasion and aggressive tax planning, both within the EU and on the international stage,” Renata Goldirova, a spokeswoman for Slovakia—the current holder of the EU rotating presidency—told Bloomberg BNA Oct. 7.
“Measures to regulate tax planners are especially important in order to ensure the effectiveness of recently approved measures such as the EU Anti-Tax Avoidance Directive and rules for mandatory exchange of tax rulings among national tax authorities,” she said.
The move to regulate tax practitioners, banks and other intermediaries has taken on enhanced political importance following the Panama Papers scandal and more recent Bahama leaks (185 TMIN, 9/23/16).
“The role of certain financial intermediaries and advisers in helping their clients conceal money offshore has been thrown into the spotlight by the recent media revelations,” says a European Commission white paper that serves as the basis for the EU finance ministers' Oct. 11 conclusions.
“While some complex transactions and corporate structures may have entirely legitimate purposes, other offshore activities may be less justifiable or even illegal,” the white paper states.
As a first step, the commission is expected to launch a public consultation by the end of 2016 on measures to regulate tax advisers.
The white paper indicates the commission also plans discussions with other “countries and international institutions about ways to go beyond” Action 12.
Beneficial ownership information is now also in focus for the finance ministers. They are expected to call for draft legislation to amend the current EU Administrative Cooperation Directive to facilitate the exchange of detailed beneficial ownership information among EU tax authorities.
In recent years the Administrative Cooperation Directive has been amended to permit automatic exchange of bank accounts details, capital gains income tax rulings among all 28 national tax authorities.
EU political pressure for whistle-blower protection has also intensified since the successful prosecution in June of Antoine Deltour, a former PricewaterhouseCoopers LLP employee responsible, with others, for the LuxLeaks revelations of the Luxembourg government's tax rulings that permitted aggressive tax avoidance by multinational companies (187 TMIN, 9/27/16).
Commission officials said finding the means under EU law to support an EU-wide whistle-blower law is a challenge.
“It might be that it will require specific whistle-blower protection provisions in different laws that regulate different sectors,” a commission official told Bloomberg BNA Oct. 5 on the condition of anonymity. “This could be done, for example, through specific legislation regulating the banking, accounting, financial markets and other sectors.”
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The European Commission white paper is at http://src.bna.com/jfv.
Copyright © 2016 The Bureau of National Affairs, Inc. All Rights Reserved.
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