miércoles, 26 de noviembre de 2014

Analysts support increased transparency to fight tax havens

Responsible corporations paying their taxes and revealing their ownership structure could be a possible solution in the fight of Europe against tax evasion and tax havens which cost billions of euro annually. EurActiv Czech Republic reports.

“We should step up our efforts to combat tax evasion and tax fraud”, Jean-Claude Juncker told the European Parliament last July. The next moment MEPs confirmed him as European Commission President. Some of them would probably like to change their decision today, as after the “Luxleaks’ scandal, the situation looks different.

The scandal erupted on 5 November, when the International Consortium of Investigative Journalists (ICJ) published articles based on a review of nearly 28,000 pages of confidential documents revealing that more than 300 international companies appear to have channelled hundreds of billions of dollars through the Luxembourg banks. They saved billions of euros in taxes.

As Juncker promised to respond to the problem, a wider discussion about tax is looming. “The solutions to the scandal of tax dodging have been apparent for some time. We need binding regulation that closes loopholes and create transparency,” Christian Hallum, senior policy analyst at the European Network of Debt and Development (Eurodad), told EurActiv Czech Republic.

“We all have a right to know how much tax companies pay to EU governments,” said Carl Dolan, head of Transparency International´s EU office in Brussels. “EU Ministers must now take action to end the secrecy of corporate tax deals in Europe. The Luxleaks deals could not have been kept secret if all companies were required to report details of their tax payments in every country where they operate,” he said.

Aimed at corporations 

The call for effective solution of tax evasion in the EU is not new in itself. The Commission has presented some initiatives in the past for a common consolidated corporate tax base (CCCTB), nevertheless the proposal is still pending as member states are dragging their feet. Other initiatives on tax are also in the deep freeze.

“Since nearly eight years I am the rapporteur for the tax agreement of the EU with Liechtenstein concerning mutual cooperation concerning tax fraud. Luxembourg and Austria were against. Nothing moved since as it requires unanimity,” German MEP and Chair of Committee on Budgetary Control Ingeborg Grässle told EurActiv Czech Republic.

One possible solution with the ambition to motivate corporations to be responsible in paying taxes is offered by a group of Czech lawyers led by Ondřej Vondráček and Czech MEP Tomáš Zdechovský (EPP). They call it a “taxparent” solution (“Taxparency”). “It is aimed at the corporations which are lowering their tax obligations to the very minimum by shifting profits outside the EU to non-transparent tax havens. Therefore the EU budget is deprived of up to €300 billion annually,” Zdechovský explains.

Under the proposed solution, a conglomerate present in at least two EU member states could decide to pay at least 11.25% of its global profit in corporate tax and make its corporate ownership structure public on its website. In such a case, it would get the “taxparent mark” to boost its public image.

Corporations paying under 11.25 % would have to face increased information obligations and would get under scrutiny of tax authorities.

“Taxparent solution does not lead either directly or indirectly, actually or potentially to the harmonisation of corporate tax rates in the EU,” Vondráček stressed.

Zdechovský believes the taxparent solution can get support from across the political spectrum, because it is simple and politically neutral. “We already presented it to the President of the European Commission, Mr. Juncker. According to my information he liked it,” Zdechovský says.

Chance to fight harder

“It looks like a very interesting initiative,” Max Heywood, Regional Co-Ordinator for the Americas at Transparency International, told EurActiv Czech Republic. However, he warns that voluntary standards and agreements are not usually sufficient by themselves to generate meaningful improvements in transparency. “It is effective legislation that creates real pressure for change,” he said. “Where leading companies do decide to voluntarily increase their levels of transparency this can also have a very positive peer pressure effect.”

Christian Hallum from Eurodad welcomes all the voices trying to come up with innovative solutions. He is worried that the Taxparent solution might lead to a race to the bottom on corporate taxes. “We also stress the need for transnational corporations to pay the tax that they are supposed to, and to prevent a situation where they can decide on their own tax rates,” he wrote EurActiv.cz.

According to Czech MEP Luděk Niedermayer (EPP) who is a member of Committee on Economic and Monetary Affairs (ECON), the proposed solution based on fair tax paying could be involved in Corporate Social Responsibility. “The question to what extent the corporate management can maximise the profit of shareholders and try to be ´socially responsible´ is not the easy one. It is up to G20 and the EU to change the rules,” he said.

According to another member of the ECON, German MEP Michael Theurer (ALDE), the Taxparency solution belongs among possible approaches which should be considered. “It is very clear that the EU and EU member states need a joint systematic approach,” he thinks. ALDE has already put forward the proposal of creating a Special Committee on Tax Avoidance, Tax Evasion and Tax Fraud in the European Parliament to deal with it, he stressed.

“We cannot allow tax havens in the EU, and certainly what happened is a chance to fight harder if possible against such practices,” Spanish MEP Pablo Zalba Bidegain, another member of ECON, told the web page. “In my opinion, we should now look at the future and the possibility to create an expert group to look for different solutions in favour of the European economy as a whole.”

“I am not in favour of flat rate taxes. This is a way for new member states to help them being attractive (and calculable) for companies. Nothing against… But in Germany a company has to pay more than 11.25 %. Our Treasury system makes sure that they pay – and pay more. The first thing needed is as well working tax authority,” German MEP Ingeborg Grässle said.

domingo, 23 de noviembre de 2014

Scope and level of card caps remain in dispute


EU lawmakers disagree over the level and scope at which card payments in Europe should be capped as the issue goes into trilogue in advance of its adoption anticipated early next year.

On 24 July 2013, the European Commission proposed a revised Payments Services Directive (PSD2) and submitted a proposal for regulation on interchange fees for card-based payment transactions.

The payments, known as multilateral interchange fees or MIFs, are charges during transactions between the merchant and buyer’s banks. Member states can lower the charge ceiling if they wish.

In April, the European Parliament voted on amendments to the legislation, which caps interchange fees at 0.2% of transaction value for debit cards and 0.3% for credit cards.

Third and four party schemes both included

Over the summer (7 July) a broad alliance of consumer and business organisations called on the Italian Presidency of the EU and the new European Parliament to make legislation capping payment card fees its “absolute priority.”

The European Payment Users Alliance backed MEP's changes to include business cards and third-party card schemes in the scope of the legislation. Members of the alliance include FuelsEurope, UEAPME (European Association of Craft, Small and Medium-sized Enterprises), EuroCommerce, the European Modern Restaurant Association, the European Retail Round Table and BEUC, the European Consumers Organisation.

A three party card scheme, such as American Express, means the issuer of the card to the consumer and the acquirer, who has the relationship with the merchant, is the same body.

A four party scheme such as Visa or MasterCard, has a separate issuer and acquirer. The acquirer pays an issuer an interchange fee, and the merchant pays the acquirer a service fee.

The EU Council of Ministers, representing the EU member states, adopted a general approach on the interchange regulation earlier this month. So-called trilogue meetings commenced yesterday (19 November) with the European Commission and Parliament to try and broker an agreement.

The Council drafted two key compromises from the Parliament’s version.
First, it gave member states the discretion to exclude three party schemes in certain circumstances - for example when they license others to issue their cards - rather than making their inclusion compulsory.

Secondly, the domestic interchange fee on debit cards would still be capped at 0.2%, but under the Council compromise, could represent a weighted average, the annual transaction value of all domestic debit card transactions, rather than a cap on each individual transaction.

Institutions will meet again in December

Pablo Zalba Bidegain, a Spanish centre-right MEP from the European People’s party (EPP), is the Parliament’s rapporteur on the proposal.

“Having started the trilogues, I outline two main points in which the Parliament’s and the Council’s positions diverged,” he told EurActiv. “First, the level of the caps for national debit transactions. Secondly, the scope of the regulation. Commission, Council and Parliament will be working on balanced solutions to these two conflicts ahead of the next trilogue on the 4th of December,” Zalba said.

“It is possible that there will be a swift agreement, but as the trilogue is just getting underway it is difficult to anticipate the speed of progress,” a source privy to the negotiations said.

Both Council and Parliament must agree an identical text before it can become law.

“We are all willing to find the best possible outcome in benefit of the European economy, particularly for consumers,” Zalba said.

Meanwhile the update to the payments services directive is unlikely to be agreed before next Spring, Commission sources told EurActiv.

The revised directive facilitates the use of low cost internet payment services, giving a mandate to the European Banking Authority (EBA) to work on regulatory technical standards in this area.

The Italian Presidency has scheduled a working party on the paper to start on Monday (24 November) at the diplomatic level.

A Commission source told EurActiv  that the executive is optimistic that a Council General Approach can be agreed under the Italian Presidency, with trilogues taking place in January under the Latvian Presidency.

jueves, 6 de noviembre de 2014

ECB and European Parliament meet ahead of supervisory role go-ahead


On November 3, the Committee on Economic and Monetary Affairs met for the public hearing of Daniele Nouy, Chair of the Supervisory Board of the European Central Bank (ECB). A summary of the hearing can be found below.

Chair of the Economic and Monetary Affairs Committee Roberto Gualtieri (S&D, IT) began by welcoming Daniele Nouy and congratulated her on the comprehensive bank assessment and on the ECB taking over its supervisory task on November 4.

Daniele Nouy’s opening remarks outlined the process and results of the asset quality review and stress test on European banks, and the preparedness of the ECB to take over the role of European Supervisory authority.

Pablo Zalba Bidegain (EPP, ES) raised a number of questions about credit organisations. He asked about the impact of credit on small and medium enterprises (SMEs) and families, and whether more credit would be made available under the ECB supervision. Taking into account the requirements for the stress test, the results demonstrated a lot of differences, he explained.

Daniele Nouy explained that the ‘transparency’ within the assessment process would provide investors with confidence, and therefore encourage them to lend to banks and in turn, allow banks to lend to SMEs. She said the ECB was not the only actor in funding the economy, and other actors would have a role to play as well. Regarding the differences of outcomes for different countries, the comprehensive assessment did not aim to reflect the position of countries, but instead concerned banks. There was some correlation with the economic situation of the countries and the banks but it was primarily about ensuring buffers for banks, she reiterated.

Renato Soru (S&D, IT) explained that Italy was one of the countries which had been affected by the results of the stress tests. The Italian public needed to understand what these stress tests were, and believe in their transparency and impartiality. Some columnists had been asking questions about why the stress tests did not take into account a number of other factors. Italian public opinion did not understand what was going on, as state aid for banks had varied between countries. He asked whether this state aid had been taken into account.

Daniele Nouy reiterated that the tests were more about banks than about countries. The economic situation in Italy had played a large role in the fortunes of Italian banks. A fair exercise had been conducted and the methodology of the asset quality review and stress test were transparent, she suggested. Regarding the risk factors which had been tested, the ECB had tested both credit and trading risks. A stress test could not assess all risk, she said. The supervisory review process (pillar 2) was coming next and would include some other types of risk. It would use all the findings of the comprehensive exercise. Regarding state aid, there were different situations if plans were approved by the Commission, banks could use a dynamic balance sheet, and were treated accordingly by the ECB.