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EC proposals on tax transparency and money laundering

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The Commission has issued a communication on further measures to enhance transparency and the fight against tax evasion and avoidance. Observing that the ‘Panama papers’ revealed how a lack of transparency on beneficial ownership can facilitate money laundering, corruption and tax evasion, this aims to harness the link between anti-money laundering and tax transparency rules.

The Commission proposes to amend the fourth anti-money laundering directive, which forms part of the action plan against terrorist financing announced in February 2016. Member states are expected to transpose the directive into national law by the end of 2016 (see The latest amendments provide for:

·        Full public access to the beneficial ownership registers: Member states will make public certain information of the beneficial ownership registers on companies and business-related trusts. Information on all other trusts will be included in the national registers and available to parties who can show a legitimate interest. The beneficial owners who have 10% ownership in certain companies that present a risk of being used for money laundering and tax evasion will be included in the registries. The threshold remains at 25% for all other companies.

·        Interconnection of the registers: The proposal provides for the direct interconnection of the registers to facilitate cooperation between member states.

·        Extending the information available to authorities: Both existing and new accounts should be subject to due diligence controls. This will prevent accounts that are potentially used for illicit activities from escaping detection. Passive companies and trusts, such as those highlighted in the ‘Panama papers’, will also be subject to greater scrutiny and tighter rules.

The Commission has also set out the next steps it intends to take to boost tax transparency following the ‘Panama papers’ revelations (see Key actions include:

·        Providing tax authorities with access to information: The Commission has proposed that tax authorities should have access to national anti-money laundering information, particularly beneficial ownership and due diligence information. This legislative proposal takes the form of an amendment to the Administrative Cooperation Directive.

·        Increasing cross-border transparency on beneficial ownership: The Commission will examine how member states could automatically exchange their national information on beneficial owners of companies and trusts with a potential tax impact.

·        Improving oversight of tax advisors’ activities: The Commission will examine how to shed more light on tax advisors’ activities and create effective disincentives for those that promote and enable aggressive tax planning.

·        EU list of uncooperative tax jurisdictions: The Commission is now working with the Council’s Code of Conduct Group to identify the most relevant countries to screen under this process, in order to have a first EU list ready in 2017.

·        Protecting whistleblowers: Current EU law contains protection of whistleblowers in sectorial legislation, for example on market abuse. The Commission will assess the need for horizontal or additional sectorial measures in order to increase the protection of whistleblowers.

Issue: 1316
Categories: News