Minimum sanctions for tax crimes, a cross-border tax identification number, an EU tax-payer's charter and stronger common measures against tax havens are some of the concrete ideas that the European Commission put forward on Wednesday to improve the fight against tax fraud and evasion in the EU.
Algirdas Šemeta, Commissioner for Taxation, Customs, Anti-fraud and Audit, said if the 27 EU Member-States "play as a team, with a common strategy, we can defeat the fraudsters and evaders, and reclaim vast sums of money that are legitimately due."
The size of the shadow economy is estimated to be nearly one fifth of the GDP on average across Member-States, representing nearly EUR two trillion in total. Given the globalization of the economy and technological advances, it is clear that isolated national efforts to overcome this problem will not work. Therefore, the Commission sets out a three-tier approach - at national level, EU level, and international -- aimed at attacking evasion and fraud from every possible angle.
Member-States should focus on improving their administrative capacity to collect taxes, as well as clearly set out in the Country Specific Recommendations. The Commission will monitor closely their progress in this field, while also providing technical assistance where needed.
Action to tackle tax evasion at European level has proven to be effective. Thanks to the EU Savings Directive, for example, Member-States exchange information on non-resident tax-payers to the value of EUR 20 billion. The challenge now is to deepen such cooperation and strengthen common tools. In this respect, agreement by Member-States on the revised Savings Directive is essential. In addition, a number of new ideas are presented. These include a possible European cross border tax identification number, a quick reaction mechanism for VAT fraud and minimum EU rules and sanctions for fraud and evasion.
For the fight against tax evasion to be truly effective, international partners must apply good governance standards that are equivalent to the EU's. The mandates that the Commission has requested to negotiate stronger savings agreements with key neighboring countries are crucial in that respect. Before the end of 2012, the Commission will also set out a "stick and carrots" approach to dealing with tax havens, and measures to deal with aggressive tax planners.
Before the end of the year, the European Commission will present an Action Plan on fighting fraud and evasion, with specific measures that could be rapidly developed. In tandem, the Commission will also come forward with its initiative on tax havens and aggressive tax planning.
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