Why Europe's new tax initiative is a big deal
Professor Ronen Palan, from City University London, debates
if the new scheme will work.
Public outcry over revelations in the Panama papers about global levels of tax dodging has led to political action. Europe's five largest economies – the UK, France, Germany, Italy and Spain – have agreed to new transparency rules, which will require banks to identify the ultimate beneficial ownership of assets.
If properly implemented, these rules could seriously dent the game that individuals and companies play to evade tax or adopt aggressive tax avoidance planning. As shown, among other revelations in the Panama papers data leak, companies and individuals use strings of shell corporations, set up offshore, in order to avoid detection from their domestic tax authorities.
The new rules will require banks to identify the ultimate beneficial owner of these strings of companies and information on the ultimate beneficial owners will now be automatically exchanged. This removes an important layer of opacity that had been used to evade taxes... Read more
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