Malta’s corporate tax system is unfair – PANA Committee Chairman Werner Langen
PANA Committee Chairman Werner Langen has argued that Malta’s corporate tax system is unfair, while addressing the PANA committee this evening.
He was addressing the PANA Committee earlier today, during the discussion regarding the draft recommendations on the PANA Committee findings.
A PANA Committee MEP had mentioned that the criteria regarding blacklist countries are unacceptable, and mentioned cooperation on automatic exchange of information should not be enough to stop being considered a risk country. “We should also include countries that have lower tax rates than certain thresholds and in particular European countries that do not comply with the criteria.”
Referring to the above, Langen said that tax rates are set by member states, and are not governed by the treaties. “I don’t think we will be able set higher or lower amounts and there is resistance to that. We do need to have fair taxation and that is something we will continue to discuss the rest of the year. Malta for example has a 35% corporate tax but brings it down 30 percentage points for foreigners. I don’t consider that to be fair.”
In their draft recommendations to the EU Council and Commission, which were published recently and are currently open for amendments by the other members of the PANA committee , Co-Rapporteur’s (Jeppe Kofod from the S&D, Petr Je?ek from ALDE) mentioned that many loopholes still exist in the current legislation on tax evasion and anti-money laundering at the EU and national levels “and consider that further strengthening of the legislation is needed.”
The document calls on the Commission to launch a broad evaluation on harmful tax measures in the Member States and the counter measures in place.
The MEPs, through the draft, would also call on the Members States to stop the use of any form of tax amnesties that can lead to money laundering and tax evasion. They also deplore the lack of statistics on the magnitude of tax avoidance and evasion, and stress the importance of developing methods to quantify the impact of these activities on countries’ public finances and economic activities. It also calls on the Commission to clarify what is illegal and what is legal, even if immoral, in the framework of tax evasion and tax avoidance practices.
The MEPs stress the urgent need for a common international definition of what constitutes an Offshore Financial Centre (OFC), tax havens, secrecy havens, a non-cooperative tax jurisdictions and a high-risk country in terms of money laundering;
While welcoming the leading role of the Commission in setting up a common EU list of non- cooperative tax jurisdictions, the document calls on the Council not to dilute the ambition of the criteria of said list. The MEPs “insist that the absence of corporate tax or a close to zero corporate tax rate should be considered as one of the criteria.”
The document also read that “in order for this list to be effective and credible, the MEPs call on the Council to put in place strong and deterrent sanctions against listed countries such as the suspension of third country equivalence regime in financial sector.” They also underlined that the assessments of individual countries should be carried out in a transparent manner.
The report read that the MEPs regret that several EU Member States featured in the Panama Papers and point out that there should be also a scrutiny mechanism established for EU Member States.
The draft recommendations stress the need for publically accessible beneficial ownership registers and standardised registers of BOs to prevent anonymity of ultimate beneficial owners (UBOs). It also calls for the creation of a global company register and of a central register of bank accounts accessible to FIUs and national law enforcement bodies.
As for intermediaries, the document reads that intermediaries are regulated in a non-homogenous manner across the EU, and calls on the EU Council to swiftly adopt the Commission proposal on mandatory exchange of information by intermediaries with the aim of strengthening their reporting obligations. The MEPs call for stronger sanctions at both EU and member state level against banks and intermediaries that are knowingly, wilfully and systematically implicated in illegal tax schemes targeting both the companies themselves as well as responsible senior management level employees and board members. They also underline the need for an EU certification of intermediaries to practice as tax professionals; calls in this connection for the possibility to withdraw licences if they are proved to promote or enable tax evasion, aggressive tax planning and money laundering.
