Tax evasion is when international companies or individuals exploit "loopholes" in the law and international treaties to pay less tax. There is a great deal of interest in this matter at present due to the recent publication of the so-called Panama Papers. The nations in the European Union (EU) may be missing out on 50 to 70 billion euros each year.
The Organisation for Economic Cooperation and Development (OECD) recently compiled a list of measures to tackle tax evasion (BEPS). The European Commission has adopted a number of these measures and also proposed new measures. In the future, member states should be able to see the amount of tax companies pay and where they pay it thanks to improved information sharing between national revenue services. This will enable tax evasion to be uncovered more quickly. In addition, member states will be issued advice on how to prevent as much tax evasion as possible. Developing countries will also receive aid to improve tax collection and prevent people or companies from abusing the rules. A proposal has been put forward to create a European blacklist of tax evaders.
Attractive environment for businesses
In the Netherlands, parent companies do not need to pay tax on profits on which foreign subsidiaries have already been taxed. The European Commission wants to limit this so-called "participation exemption". Companies would then have to work within tighter rules than in the rest of the world. The cabinet wants European rules to align with global agreements as far as possible.