Tax evasion is an illegal act, where a person, organisation or corporation purposely avoids paying their true tax liability. Failing to pay taxes is a serious criminal offence, and those caught evading taxes are usually subject to criminal charges and substantial penalties. Tax evasion is not to be confused with tax avoidance, which is the legal practice of using the tax regime in a single territory to one’s own advantage to decrease the amount of tax that’s payable by means that are within the law.
The exposure of rogue offshore accounts following the unprecedented release of the Panama Papers in 2016 by German newspaper Süddeutsche Zeitung, has highlighted the prevalence of tax evasion committed by major corporations and celebrities. Amongst those included in the infamous data leak were 140 politicians and public figures from around the globe. This revelation revealed a myriad of methods that the wealthy use to exploit offshore tax havens.
One year after the Panama Papers scandal broke, the International Consortium of Investigative Journalists leaked more than 1,400 GB of data, containing approximately 13.4 million documents, which were obtained by Süddeutsche Zeitung. This major financial data leak put the world’s elite under extreme scrutiny yet again. These files, dubbed the Paradise Papers due to the idyllic locations of many of the offshore jurisdictions involved, further exposed how embedded offshoring is in the global financial system.
The European Union is taking preventive measures to crack down on tax evasion. Since the 1 January, national tax authorities across the EU have been able to access information on the beneficial owners of companies, trusts and other entities. A statement released by the EU claimed that these new rules would provide a “major boost” to tax authorities in the fight against tax evading measures highlighted in the Paradise Papers, by allowing tax companies to react quickly and efficiently to tax evasion and fraud. In addition, the European Parliament is also considering creating a permanent standing committee to investigative misconduct in the field of taxation.
On Tuesday 15th May, the European Parliament held a public hearing in Brussels discussing “The fight against harmful tax practices within the European Union and abroad” in which the European Ombudsman, Ms Emily O’ Reilly, assessed the possible impact of her recommendations aimed at increasing transparency in the Council’s working methods in this area. Furthermore, on Tuesday 29th June, as part of the Strasbourg session, delegates will discuss the EU-Norway Agreement on administrative cooperation combating Value-Added Tax (VAT) fraud.
Here is a screenshot of the entry in IATE for tax evasion.
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- Garside, J. (2018). Paradise Papers leak reveals secrets of the world elite’s hidden wealth. [online] the Guardian. Available at: https://www.theguardian.com/news/2017/nov/05/paradise-papers-leak-reveals-secrets-of-world-elites-hidden-wealth [Accessed 16 May 2018].
- Harding, L. (2018). What are the Panama Papers? A guide to history’s biggest data leak. [online] the Guardian. Available at: https://www.theguardian.com/news/2016/apr/03/what-you-need-to-know-about-the-panama-papers [Accessed 16 May 2018].
- europa.eu. (2018). Tackling tax evasion: Parliament adopts recommendations by inquiry committee | News | European Parliament. [online] Available at: http://www.europarl.europa.eu/news/en/headlines/economy/20171201STO89309/tackling-tax-evasion-parliament-adopts-recommendations-by-inquiry-committee [Accessed 16 May 2018].
- lu. (2018). Luxembourg Times – European Union – New rules to prevent tax evasion, money laundering. [online] Available at: https://luxtimes.lu/european-union/32335-new-rules-to-prevent-tax-evasion-money-laundering [Accessed 16 May 2018].
Written by Emma Wynne – Robert Schuman Journalism Trainee