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Resolution 1881 (2012) Final version
Promoting an appropriate policy on tax havens
1. Sound tax systems are the cornerstone
of public finances: they underpin democratic governance, State authority,
macroeconomic stability and social cohesion. This delicate balance
relies on tax compliance by all taxpayers (individuals or enterprises).
It is extremely worrying that certain activities by secrecy jurisdictions,
tax havens and offshore financial centres facilitate massive tax
avoidance, evasion and fraud which cause serious harm to the public
interest of all Council of Europe member States, as well as many
other countries, in particular the developing ones.
2. The Parliamentary Assembly is concerned about the extent of
the offshore financial system, in particular tax havens, and its
impact on public finances, the stability of financial markets and
society at large. With all countries having surrendered some of
their sovereignty to globalisation and the global economy, tackling
global distortions due to harmful or predatory tax practices is
both a moral duty and a common cause.
3. In response to growing public outcries, international co-operation
has intensified, notably at the G20 level, to tackle the root problems
concerning tax havens: bank secrecy, lack of transparency and effective public
oversight, regulatory dumping, predatory tax arrangements and abusive
accounting techniques within multinational companies (notably abusive
transfer pricing). However, the situation is far from satisfactory
and further progress is needed to close legal gaps and loopholes
and to ensure more effective consolidated supervision of the offshore
financial system and jurisdictions considered as tax havens.
4. The Assembly therefore calls on the Bank for International
Settlements (BIS), the International Monetary Fund (IMF) and the
Organisation for Economic Co-operation and Development (OECD) to
step up their action – complementing each other’s efforts whenever
feasible – on measuring and analysing financial flows to and from
the offshore financial centres and jurisdictions deemed tax havens,
as well as their interaction with the mainstream economic activity
of other States.
5. The Assembly also invites the IMF and the OECD to:
5.1. enhance surveillance of their
member States’ tax regimes and to stimulate improvements aimed at
eliminating harmful tax practices;
5.2. study ways of strengthening corporate social responsibility
and ethics and make proposals for defining more clearly the responsibilities
of multinational enterprises towards society in all countries where
they operate;
5.3. issue recommendations to their member States to introduce
country-by-country reporting with a view to increased corporate
tax accountability and disclosure of financial information (notably
on costs, profits and taxes paid) concerning the activities of multinational
companies in all countries in which they operate and across all
business sectors, starting with the financial sector;
5.4. consider the possibility of setting minimum acceptable
tax rates in tax havens to minimise national budgets’ losses.
6. In this context, the Assembly welcomes the entry into force
in 2011 of the Protocol amending the Convention on Mutual Administrative
Assistance in Tax Matters (CETS No. 208) after its launch in 2010.
The Council of Europe and the OECD should vigorously promote this
instrument, not only among their member States and their dependent
territories, but also among their economic partners across the globe.
Moreover, they could jointly assess the implementation of this convention
in the near future.
7. The Assembly hails the outcome of the G20 Summit in Cannes
(3-4 November 2011), where the leaders of the G20 countries committed
to signing the Convention on Mutual Administrative Assistance in
Tax Matters (ETS No. 127) and its amending protocol, strongly encouraged
other jurisdictions to join the convention and undertook to “consider
exchanging information automatically on a voluntary basis as appropriate
and as provided for in the convention”.
8. Moreover, the Assembly strongly supports steps taken by the
European Union towards the gradual harmonisation of tax practices
among its member States and, in particular, efforts to introduce
automatic exchange of information for certain categories of income
and capital as from 2015. It considers that this process could be
accelerated and that similar efforts should be undertaken by non-European
Union countries.
9. In the same spirit, the Assembly urges the European Union
member States to support efforts to put in place country-by-country
reporting obligations (notably on costs, profits and taxes paid)
in respect of accounts of multinational enterprises that are registered
or operate in the European Union. This practice should gradually be
extended to all Council of Europe and OECD member States, as well
as to G20 member countries.
10. With a view to holding governments to account in tax matters,
the Assembly urges national parliaments to:
10.1. examine domestic tax standards, policies and collection
procedures in order to spot artificial tax minimisation techniques
which may be legal but are unethical, and propose legislative measures
to remedy the distortions thus detected;
10.2. closely monitor the work of governments on the enforcement
of national tax laws, the administration of tax collection and the
respect of international commitments in tax matters;
10.3. ensure in-depth scrutiny and revision, if need be, of
any draft bilateral tax agreements, in particular with secrecy jurisdictions
and countries considered as tax havens, before their ratification;
10.4. adopt national legal provisions allowing legal entities
registered in offshore territories to carry out business activities
in the country only if they disclose their founding members and
ultimate beneficiaries.
11. Convinced that tax compliance by all taxpayers and due diligence
by all intermediaries in tax matters are essential to upholding
good governance, justice and prosperity, the Assembly calls on the
Council of Europe member States to:
11.1. step up pressure, particularly on those States that have
direct influence over secrecy jurisdictions and tax havens identified
in this report, with a view to enhancing their co-operation in tax
matters and phasing out fiscal bank secrecy;
11.2. identify and eliminate legal provisions permitting the
holding of anonymous accounts, off- balance-sheet bookkeeping and
bearer shares;
11.3. ensure that all entities (notably trusts and funds) are
properly registered and ultimate beneficial ownership publicly disclosed,
in particular in respect of capital flows originating in or destined
for European countries and their dependent territories;
11.4. ensure that all corporate registries provide a set of
standard information on registered entities’ shareholders, boards,
directors and historical background and allow for online access
to such data;
11.5. support efforts to harmonise European corporate tax policy,
such as through the adoption of the common consolidated tax base
as a first step towards taxing profits of multinational corporations
on the basis of a formula that takes the genuine economic substance
of their activities (namely, sales turnover, assets invested and
employment) into account in the various countries where they operate;
11.6. move towards the automatic exchange of information in
tax matters and ensure good use of safeguards for personal data
protection, notably the Convention for the Protection of Individuals
with regard to Automatic Processing of Personal Data (ETS No. 108)
and its Additional Protocol regarding supervisory authorities and
transborder data flows (ETS No. 181), including with their international economic
partners;
11.7. broaden the scope of action of financial intelligence
units beyond strategies for tracing money laundering in order to
also help tackle tax evasion;
11.8. strengthen the capacity of national tax authorities –
through expanded investigative powers, training and resources –
to enable more effective controls, prosecution and repatriation
of funds lost through tax evasion involving secrecy jurisdictions,
tax havens and offshore financial centres;
11.9. seek enhanced corporate tax accountability and financial
reporting by large domestic enterprises and multinational companies
in every country in which they operate;
11.10. review their policies on transfer pricing in order to
reduce opportunities for multinational businesses to manipulate
reporting of profits and taxes due;
11.11. modify legal provisions that are used to circumvent their
domestic rules, notably those on tax breaks, and to escape proper
scrutiny or regulation in tax matters, both national and international;
11.12. join the Global Forum on Transparency and Exchange of
Information for Tax Purposes, if they have not yet done so, and
strengthen the process by shifting from peer review to expert review;
11.13. use the United Nations Committee of Experts on International
Cooperation in Tax Matters as the appropriate forum for both setting
standards and supporting developing countries in their efforts to counter
abusive tax practices.
12. Finally, the Assembly invites the OECD and the European Commission
to work together towards optimising the prevailing tax models, helping
developing countries to counter abusive transfer pricing and maximising
tax receipts in countries where multinationals carry out a substantial
part of their activities.