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European Parliament Approves Program to Help Tax Authorities Fight Tax Evasion — Orbitax Tax News & Alerts

The European Parliament issued a release on 20 May 2021 announcing the approval of a program to help tax authorities fight tax evasion.

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Parliament greenlights EUR 270 million programme to help tax authorities fight tax dodging

MEPs approved the regulation establishing the Fiscalis programme running from 2021-2027, which will provide financial resources to national tax authorities to cooperate better.

Reacting to the go ahead for the programme, the rapporteur Sven Giegold (Greens, DE) said:

"Public coffers are empty and cooperation between tax administrations in Europe and beyond is vital to ensure that everybody contributes their fair share to society."

"The European Parliament has strengthened the Fiscalis programme by including a list of priority actions for national tax administrations and ensuring the financing of joint audits, in order to effectively fight tax evasion and avoidance across borders. As part of the final agreement, the Council will meet annually with Members of the European Parliament to discuss matters of tax cooperation. This is an important recognition from the Member States that democratic scrutiny in matters of taxation is crucial."

The decision to ratify the agreement reached between the European Parliament negotiators and the Portuguese Presidency of the Council was announced on Wednesday night after no requests had been made for the European Parliament to reject or amend the deal reached by EP and Council negotiators.

Information sharing - the simple and effective tool

Often, the weak point exploited by tax avoiders and evaders is that national authorities do not share enough information between each other, sometimes simply for a lack of administrative capacity to do so. The Fiscalis programme will direct EUR 269 million over a 7-year period to help national tax administrations build their capacity to share information among each other and better enforce EU tax law.

How Parliament beefed up the programme

MEPs succeeded in improving various aspects of the programme compared to the proposals of the Commission and member states. These improvements include:

  • a list of priority actions that national tax authorities will need to work on to fight tax evasion and avoidance.
  • an improved evaluation and reporting system will uncover possible shortcomings in the cooperation and exchanges between tax authorities.
  • the financing of joint audits of several national tax authorities which are an effective instrument to control tax payments of transnational corporations.
  • the programme will be open to experts of least developed countries which will be instrumental to achieve a global exchange between tax authorities in the long run.
  • Council and the Commission will be heard on a yearly basis by MEPs to discuss the lessons learnt from the Fiscalis Programme.

Background

The Programme aims to support tax authorities to enhance the functioning of the single market, foster the EU's competitiveness and fair competition in the Union, protect the financial and economic interests of the EU and the Member States, including protecting those interests from tax fraud, tax evasion and tax avoidance, and improve tax collection. It also has the specific objective to support tax policy and the implementation of EU tax law, to encourage tax cooperation, including the exchange of tax information, and to support administrative capacity building. Similar EU programmes have existed since 1998.