Global Financial Integrity

 

European Commission Move to Abolish Bank Secrecy Critical to Fighting Tax Evasion

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Monique Perry Danziger, +1 202 293 0740 ext. 222

WASHINGTON, DC – Global Financial Integrity (GFI) applauds the European Commission’s adoption of measures to improve cooperation between EU member states and increase transparency in tax assessment and collection. These measures to abolish bank secrecy and foster greater cooperation between EU nations are part of wider EU efforts to crackdown on tax evaders.

GFI urges Congress to pursue similar measures to increase transparency and accountability in light of recent events highlighting the role that secrecy has played in tax evasion and fraud.

Tax fraud in Europe has escalated and is estimated to cost as much as $257 billion to $321 billion annually. That is equivalent to 2.5 percent of EU’s economy.

The European Commission proposes in particular to:

  • Cover all taxes and duties levied by the Member States and their administrative subdivisions, as well as compulsory social security contributions;
  • Introduce compulsory spontaneous exchange of information concerning refunds of taxes made by national tax authorities to non residents;
  • Allow officials of one country to actively participate in administrative enquiries on the territory of another country;
  • Allow that recovery assistance is requested in an early stage of the recovery process, if this leads to an increase of the recovery chances;
  • Simplify and rationalise the procedures to be used when requesting or providing mutual assistance;

Among EU nations, only Austria, Belgium and Luxembourg still have bank secrecy legislation. The Austrian foreign ministry said while it wants to cooperate with the EU in liberalizing bank secrecy laws, it has no plans to amend its legislation governing bank secrecy.

“The EU measures are a model of how solidarity and communication between nations may engender improved revenue collection while hindering the ability of those who seek to evade or assist others evade taxes,” said GFI director Raymond Baker.