September 28. 2023. 5:38

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Time for the Council to shell out some justice and fight tax avoidance

EU member state governments should finally make progress on the EU’s Unshell directive that is aimed at clamping down on tax avoidance tactics, argue Paul Tang, Gilles Boyer, and Ernest Urtasun.

This month’s meeting of EU finance ministers should have been a watershed moment in the fight against tax avoidance.

However, instead of riding the wave of the Parliament’s overwhelming support for a law against shell companies, Member States failed to discuss the Unshell Directive at their meeting of finance ministers.

This way they run the risk of leaving the file in limbo. As the European Parliament’s negotiating team for this directive, we call on EU Member States to discuss the law at the political level and adopt it to ensure everyone pays their fair share of tax.

In Europe, outrage often seems to be the driving force behind tax policy. Revelations like LuxLeaks, Panama Papers, Pandora Papers, OpenLux and countless others have left citizens shell-shocked as they reveal how the global rich and big corporates evade their most basic duty: to contribute their fair share to society.

The European Commission and Parliament have heard citizens’ demands to end this practice. Sadly, it seems their voices do not penetrate the thick walls of the Council building.

It was a memorable vote this January. With a majority of 99.7%, the European Parliament adopted the Unshell Directive, a law to crack down on the shell game played by the global rich and big corporates to dodge taxes via letterbox companies.

The law was introduced after OpenLux, which exposed how the likes of Ronaldo, Shakira and Amazon use shell companies to avoid paying their fair share of taxes, leaving honest taxpayers to pick up the bill.

Indeed many shell companies exist solely to exploit loopholes in tax laws, costing EU taxpayers a staggering €60bn every year.

After in-depth discussions and feeling citizens’ growing impatience, Parliament adopted this law, which would render tax avoidance via letterbox entities all but impossible, with 637 in favour and only two against – a majority unheard of in the often-divisive area of tax law.

So we are disappointed that EU Member States have decided to bury their heads in the sand, blatantly disregarding the wishes of European citizens and their representatives.

After diluting the proposal beyond recognition, the Swedish Council presidency failed to put even this watered-down version forward to the EU finance ministers at their meeting in May.

With the item missing from the agenda, national opposition was safely concealed from the public eye. It leaves neither national parliaments nor the European Parliament in a strong position to scrutinize the Council’s decision-making.

As the negotiating team, we urge the Swedish and the upcoming Spanish EU Council presidency to put the Unshell directive on the agenda of the coming meetings of finance ministers and have the Council meeting live-streamed.

European citizens have at least the right to hear the explanation of their governments – one by one – as to why they block this directive and do not move forward in the fight against tax avoidance. Of course, we will do everything within our reach to make this the most watched Council meeting ever.

Enough is enough. Tax avoidance has persisted for far too long. The European Parliament wants to end it. Citizens want to end it.

By adopting the Unshell Directive, the European Council has the power to make a big leap in the right direction. It’s high time for Member States to break free from their shells and embrace the law. Let’s make sure everyone contributes their fair share.

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