EU Moves to Tackle Tax Evasion

Bulgaria in EU | April 14, 2013, Sunday // 10:11|  views

The six biggest economies in the Eurozone are launching an initiative to bring to an end large scale tax evasion, costing European cash-strapped governments around one trillion euros a year. File photo

The finance ministers of the six biggest economies in the European Union have made a unanimous decision to fight together against tax evasion and "tax havens."

Last Thursday, the European Commission called on EU states to do more to tackle tax fraud after an unprecedented leak of documents revealed the closely guarded investment information of more than 100 000 people around the world.

Tax frauds cost European cash-strapped governments around one trillion euros a year, according to estimates of EU executives.

After the first round of negotiations in Dublin, focused on the Eurozone crisis, Algirdas Semeta, the European Commissioner for Taxation and Customs Union, Audit and Anti-Fraud, informed that the Netherlands, Belgium, and Romania, have expressed support for the initiative of the finance ministers of the big six – Germany, France, Great Britain, Poland, Italy and Spain.

Austria is the only EU Member State that is still resisting to make public and to share tax information.

The project is to lead to banks automatically sharing information about their clients with foreign authorities when there are suspicions of tax evasion.

The number of Member States supporting the project is expected to grow.

In what is believed to be one of the largest ever leaks of financial data, the Washington, D.C.-based International Consortium of Investigative Journalists has received nearly 30 years of data entries, emails and other confidential details from 10 offshore havens around the world

Nearly forty media outlets in 35 other countries have also been involved, but not Bulgaria.

The files contain information on over 120 000 offshore entities — including shell corporations and legal structures known as trusts — involving people in over 170 countries.

The leak amounts to 260 gigabytes of data, or 162 times larger than the US State Department cables published by WikiLeaks in 2010.

"What we found as we started digging in the records is a pretty extensive collection of dodgy characters: Wall Street fraudsters, Ponzi schemers, figures connected to organized crime, to arms dealing, money launderers," said Michael Hudson, a senior editor at the ICIJ, as cited by CBC.

"We just found a lot of folks involved in questionable or outright illegal activities."

There was also plenty of information related to legal offshore dealings. Offshore investments aren't illicit as long as they are not used to evade taxes or launder money.

The leaked data also contains revelations about:

Elite Russian scammers who stole millions from the country's treasury in a deadly heist that sparked a diplomatic row with the US; the fraudster hit with the second-biggest fine in history from Ontario's stock-market regulator; top German, French and Swiss banks that set up thousands of secretive companies in offshore havens for such clients as Thai and Pakistani politicians.

In many cases, the leaked documents expose insider details of how agents would incorporate companies in Caribbean and South Pacific micro-states on behalf of wealthy clients, then assign front people called "nominees" to serve, on paper, as directors and shareholders for the corporations — disguising the companies' true owners.

Often the companies were set up through intermediary law and accounting firms, as well, adding a further layer of anonymity for investors.

Sometimes these methods were used by figures with known links to organized crime, arms dealers and ex-mercenaries. In other instances, documents reveal tax dodgers funneling money offshore, beyond the eyes and arms of their nation's treasury.

Bulgarians are said to be among those around the world, who sought utmost secrecy in offshore tax havens.

The list includes acting European politicians and dictators of impoverished countries.

One of them, it has emerged, is Jean-Jacques Augier, a close friend of French President Francois Hollande and treasurer for his presidential election campaign. Augier had invested in offshore businesses in the Cayman Islands.

The daughters of the President of Azerbaijan, Ilham Aliev, also own offshore firms, controlled by one of Aliev's closest friends. Olga, the spouse of Russia's Deputy Prime Minister, Igor Shuvalov, has made the list as well.

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Tags: tax fraud, European Commission, tax havens, offshore, leak, financial, data, tax evasion, Eurozone, Algirdas Semeta


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