STOP

Fifty Shades of Tax Dodging • 41
Automatic exchange of information
In relation to automatic exchange of information, the EP
Annual Report on Taxation 2015 included a strong and
progressive recommendation for the inclusion of developing
countries through “pilot projects … with developing countries
to be implemented for a transitional and non-reciprocal
period when implementing the new global standard.” 215
The 2015 tax and development report passed by the EP in
June reaffirmed this recommendation 216 and added that
“continuing support in terms of finance, technical expertise
and time is needed to allow developing countries to build the
required capacity to send and process information.” It was
important to stress, the report added, that “the new OECD
Global Standard on Automatic Exchange of Information
includes a transition period for developing countries,
recognising that by making this standard reciprocal, those
countries that do not have the resources and capacity to
set up the necessary infrastructure to collect, manage
and share the required information may effectively be
excluded.” 217 With these recommendations, the EP has shown
itself as leader in the EU when it comes to the inclusion
of developing countries in the automatic exchange of
information.
EU solutions
Although there are several groups in the EP that are
sceptical of the EU, a broad majority of MEPs are still in
favour of more EU involvement on tax. The EP has repeatedly
encouraged the European Commission to take a more
proactive role on tax justice, not least exemplified in the
hearings of various Commissioners in the special committee
on tax rulings in 2015. 218 The EP has also long been a strong
supporter of the CCCTB proposal for tax coordination across
the EU, a position reiterated in 2015. 219 The Parliament’s
2015 Annual Tax Report also stresses that “coordinated
action at EU level … is necessary to pursue the application of
standards of transparency with regard to third countries.” 220
However, the EP has also been critical of the current way
that tax coordination takes place in the EU, in particular with
the secretive Code of Conduct Group on Business Taxation
that meet under the EU Council. In 2015, the EP called for
a review of the group’s mandate “in order to improve its
effectiveness and provide ambitious results, for example by
introducing the obligation to publish tax breaks and subsidies
for corporations” and also asked the group to be more
transparent by publishing “an oversight of the extent to which
countries meet the recommendations set out by the group in
its six-monthly progress report to the finance ministers.” 221
These proposals would all be welcomed corrections to the
largely ineffective Code of Conduct Group.
Global solutions
The EP has strongly signalled its support for the creation
of an intergovernmental UN body on tax. This has been
done through its 2015 Annual Tax Report and through the
development committee’s report on taxation. 222 In the latter,
the EP “urges the EU and the Member States to ensure that
the UN taxation committee is transformed into a genuine
intergovernmental body, better equipped and with sufficient
additional resources, inside the framework of the UN
Economic and Social Council, ensuring that all countries
can participate on an equal footing in the formulation and
reform of global tax policies.” 223 Coming a month before
the Financing for Development summit in Addis Ababa, the
recommendation was an important signal. However, as with
many of the EP’s progressive recommendations on tax,
the EU’s Member States are not bound by it in any way and
unfortunately chose to ignore it.
Conclusion
Despite the broad political representation and diversity
in the European Parliament, it is noteworthy that MEPs
have been able to agree on a number of very progressive
recommendations for Member States and the Commission
when it comes to tax. What is particularly encouraging
is that the EP has shown its commitment to addressing
how the EU’s tax policies affect developing countries and
have proposed several useful policy solutions. The EP has
not only put forth policy ideas, it has also fought for real
legislative victories on tax justice, most notably perhaps
on the Anti-Money Laundering Directive and most recently
in its review of the Shareholders’ Rights Directive. Where
the EP has been most effective so far is in pushing for
corporate transparency measures, where it has co-decision
powers. However, on issues directly linked to tax policies,
the EU treaties grant the EP few legislative powers and
they are often left on the sidelines issuing non-binding
recommendations. 224 This is unfortunate as the EU and
its Member States could learn a lot from listening to the
Parliament’s continued support for tax justice.
Cynics will say that powerful groups within the EP prefer
issuing non-binding reports rather than fighting for real
influence, as exemplified in 2015 by the hesitation first to
topple Juncker over the LuxLeaks revelations, followed by the
failure to set up a strong inquiry committee to investigate the
leaks. Then finally some groups hesitated to support public
country by country reporting in a legislative proposal, despite
having supported non-binding calls for such a legislative
initiative for years. In spite of its shortcomings in terms of
legislative powers and some political groups’ unwillingness to
fight when it matters, the EP nevertheless remains one of the
strongest allies for developing countries and for tax justice.