How can the EU deal with tax evasion and financial crime?

After years of discussion on the issue of how to tackle tax avoidance, the EU has now backed a new report which gives an indication of how countries can address the problem.

Following the release of the Panama Papers, the EU has been increasingly focused on fighting tax evasion through tougher legislation. One of the ways it plans to do this is through the money laundering directive, which would force companies to disclose their real owners.

The biggest finding in the report was that, despite efforts, one of the main reasons previous policies haven’t worked is that there’s a lack of political will among member states.

The report claims that the 28 EU members aren’t putting enough effort into dealing with financial crime or tax evasion. It also claims that “Until the member states change their approach, we won’t be able to move forward.”

Among others, the European Parliament says that Belgium, Cyprus, Hungary, Ireland, Luxembourg, Malta and The Netherlands show signs of becoming “tax havens”, and that they allow aggressive tax planning to take place.

It has accused Denmark, Ireland, Sweden, and Finland of increasing the risks by opposing digital taxes. Also, Malta and Cyprus allow “golden visas”, which the Parliament opposes. And, it claims European banks have been too lenient when it comes to tackling money laundering.

According to Luděk Niedermayer, EPP rapporteur: “We know exactly what didn’t work in the past and we must change the system accordingly. We want to make sure that for people that want to launder money, Europe is not the right place.”

As explained in the report, Parliament has been working on new legislation, which would include changes to VAT and digital taxes. However, this has been blocked by the European Council.

One of the biggest problems being faced by the EU is a lack of transparency in tax policies. It makes it difficult for member states to be accountable. Parliament says that the only way to move forward is to put more pressure on individual governments to deal with the problem.

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