Trust Bloomberg Tax for the international news and analysis to navigate the complex tax treaty networks and global business regulations.
By Joe Kirwin
Nov. 16 — Europe must take the lead in fighting against corporate tax evasion and secret tax havens in the wake of Donald Trump’s election as U.S. president, renowned economist Joseph Stiglitz told members of a special European Parliament Panama Papers investigative committee.
Referring to Trump as “evader-in-chief’’ in an appearance Nov. 16 before EU lawmakers, Stiglitz warned that measures to fight evasion under the Obama Administration will end.
“The U.S. Department of Treasury has taken measures in recent months to reveal beneficial owners of companies. But those efforts will come to a halt,” Stiglitz said.
EU lawmakers invited the former Clinton administration economist and Nobel economics prize winner to testify after he agreed to requests by Panama to head a committee that would probe the Panama Papers and measures that the Panamanian government should take to reform its system. Stiglitz and other members resigned in August after the Panamanian government reneged on a commitment to publish the committee’s report regardless of its content.
“I had hoped that our work requested by the Panama government would serve as a template on how all tax havens should be reformed,” Stiglitz said.
“After we resigned, we decided to continue our work and make recommendations,” he told the committee.
Stiglitz presented a pair of reports outlining measures to clamp down on tax havens and unfair tax competition. One of the two, “Overcoming the Shadow Economy,” suggests cutting tax havens out of the global financial system and creating mandatory publicly searchable registries in every country.
Despite urging Europe to take the lead against corporate tax evasion, he said European countries have contributed more to tax evasion than the U.S. because of residency rules.
“The U.S. tax laws force individuals and companies to pay taxes regardless of where they are working and doing business,” Stiglitz said.
“But European laws that only tax individuals and companies on income where they reside encourage money to be moved abroad.”
He also called on the the European Union to sanction U.S. states such as Delaware and Nevada that maintain secrecy over the beneficial owners of companies.
According to Stiglitz, global rules revealing the beneficial ownership of companies are the the most important measure needed to crack down on global corporate tax evasion and tax havens.
“Without strict measures revealing individuals and companies that own companies, it will be very difficult to crack down on the use of shell companies registered in tax havens,” Stiglitz said.
“The Panama Papers was just the tip of the iceberg. This is a massive industry that is a global problem.”
Parallel to the report on Panama and tax havens, Stiglitz and nine other tax experts serving on the Independent Commission for the Reform of International Corporate Taxation (ICRICT) concluded in a separate study that reducing tax competition among countries—which is “leading a race to the bottom"—will require:
Stiglitz and the other authors, in the ICRICT report on tax competition, insisted EU efforts to crack down on harmful tax competition via the Code of Conduct Group for Business Taxation have failed.
“It did not prevent any of the egregious abuses which have been revealed in recent years by the Luxembourg leaks scandal, investigations by the media and civil society and the illegal state aid inquiries of the European Commission,’' the report stated. It added that “free and fair tax competition amounts to no more than a race to the bottom.”
Stiglitz also urged EU lawmakers to push to have all tax rulings made public, and to sanction any country that imposes jail terms against whistleblowers.
A Luxembourg court recently handed down a suspended jail sentence against Frenchman Antoine Deltour for leaking documents that led to the LuxLeaks scandal revealing sweetheart tax rulings the Luxembourg government agreed with hundreds of multinational companies.
To contact the reporter on this story: Joe Kirwin in Brussels at firstname.lastname@example.org
To contact the editor responsible for this story: Penny Sukhraj at email@example.com
Copyright © 2016 The Bureau of National Affairs, Inc. All Rights Reserved.
All Bloomberg BNA treatises are available on standing order, which ensures you will always receive the most current edition of the book or supplement of the title you have ordered from Bloomberg BNA’s book division. As soon as a new supplement or edition is published (usually annually) for a title you’ve previously purchased and requested to be placed on standing order, we’ll ship it to you to review for 30 days without any obligation. During this period, you can either (a) honor the invoice and receive a 5% discount (in addition to any other discounts you may qualify for) off the then-current price of the update, plus shipping and handling or (b) return the book(s), in which case, your invoice will be cancelled upon receipt of the book(s). Call us for a prepaid UPS label for your return. It’s as simple and easy as that. Most importantly, standing orders mean you will never have to worry about the timeliness of the information you’re relying on. And, you may discontinue standing orders at any time by contacting us at 1.800.960.1220 or by sending an email to firstname.lastname@example.org.
Put me on standing order at a 5% discount off list price of all future updates, in addition to any other discounts I may quality for. (Returnable within 30 days.)
Notify me when updates are available (No standing order will be created).
This Bloomberg BNA report is available on standing order, which ensures you will all receive the latest edition. This report is updated annually and we will send you the latest edition once it has been published. By signing up for standing order you will never have to worry about the timeliness of the information you need. And, you may discontinue standing orders at any time by contacting us at 1.800.372.1033, option 5, or by sending us an email to email@example.com.
Put me on standing order
Notify me when new releases are available (no standing order will be created)