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Draft of EU Anti-Tax Evasion Law is Under Pressure after Panama Leaks

April 7
4:00 AM 2016

Anti corruption activist and lawmakers heavily criticized the draft of EU anti tax-evasion law. In the meantime, Prime Minister of Iceland resigned following protest over offshore account.

Transparency International advocacy group posted the draft on its website. In the draft, all EU multinational companies was obliged to disclose their tax and financial data to the public for every EU country in which they operate. However, they are require to do so for the activities conducted outside the region.

While all European Union multinational companies are only required to provide aggregated information for their activities beyond the bloc. The draft, which is due to present next week, has drawn more criticism from anti corruption activist following the leaks of more than 11.5 million documents belonging to Panamian lawfirm, Mossack Fonseca, on Sunday.

The advocacy group strongly requsted European Union to amend the draft. In the statement, as quoted by Reuters, the Berlin-based group said the European Union multinational companies must also provide comprehensive report for their activities, regardless of the location they operate.

"You can't have 28 reports for the EU and one report for the rest of the world. It defeats the purpose of this legislation and means that companies will still be able to use tax havens," Transparency International said.

In the draft, the regulation only imposed on companies with a minimum annual turnover of 750 million euros ($855 million). The minimum threshold aim to avoid smaller companies to be burden with unnecessary costs.

In regard to the minimum threshold, another group, Oxfam, said in its statement, "The proposed measures would cover too few companies. It makes us wonder if the European Commission is really willing to put an end to tax dodging."

The Panama leaks have exposed many politicians worldwide who used Mossack Fonseca's service to launder money, dodge sanctions and avoid tax. One of them is Finland Prime Minister Sigmundur David Gunnlaugson.

BBC reported that the document mentioned about him having an undeclared interest linked to his wife's wealth. The document showed the Prime Minister Gunnlaugson and his wife had investments placed in the British Virgin Islands, including debt in three failed banks of Iceland. The irony is that his offshore investments were held while Iceland enforced capital controls.

Thousands of angered citizens marched the street in a protest asking Gunnlaugsson to step down. Bloomberg reported that Prime Minister Sigmundur David Gunnlaugsson finally resigned following the protests and pressure of opposition and his own party.

Panama Leaks have drawn interest from many advocacy groups related to the draft of EU anti tax-evasion law. While following the document leaks, Iceland Prime Minister resigned over allegation of tax evasion and hiding his wealth.

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