Committee on Economic and Monetary Affairs (ECON)

Tax fraud and tax evasion are increasing problems for EU member states because states depend on income from taxes to function. Contributing factors to the tax evasion and fraud are e.g. lack of transparency and different tax systems between the states. What can the EU do to combat tax evasion and fraud?

Dear delegates,

I wish you all welcome to the committee on Economic and Monetary Affairs. My name is Daniel Backström and I will be your Committee President during the Copenhagen MEP Conference. Your issue topic has had some interest for many years, but has recently soared to the headlines – much as a consequence of the recent Panama leaks.

Tax fraud and evasion are serious problems within the EU. According to the European Commission, corporate tax practises cost EU states up to 70 billion euros a year in lost tax revenue. This is alarming, as we all know that it is money away from public services. Another consequence from tax evasion and tax fraud is unfair competition on the European Single market. This is because some cross-border operating companies can pay up to 30 per cent less tax, than rival local companies.

The issue you will be considering is how the EU could combat tax evasion and fraud. To succeed in creating a successful resolution on this topic, it is essential for you to understand how the tax system works. What flaws does it have and how do corporations take advantage of it. Other questions for you to consider is the lack of transparency in the tax system. Try to understand these as well as possible, and think of possible solutions.

Moreover, it is important for you to follow the development of the issue as we approach the MEP Conference, as this is something the EU is working on at present. It would also be good for you to do some case studies. Try to find out how corporations like Google, Facebook, McDonald’s, Starbucks or Amazon have aggressively avoided tax payments when operating in the EU.

Good luck with your preparations,

Committee President Daniel Backström (Fi) and – Pantelis Naoum (Gr)

Research Tips

The following links will give you some basic information to help you begin your research. However, we expect you to explore the issue further on your own. As taxation is a complex entirety, it is especially important for you to understand the basics, so that the debate in our committee will be meaningful and productive – in order for the resolution to succeed.

  • European Union topics – Taxation

This link provides you a simple look at what EU’s role is regarding taxation and how they oversee it. The second link in brackets is for you to further deepen your knowledge about EU’s role in taxation, and much more.

http://europa.eu/pol/tax/index_en.htm (http://ec.europa.eu/taxation_customs/taxation/gen_info/index_en.htm)

  • The European Union Explained – Taxation

This is a link to a 12 page pdf file published by the European Commission. It explains the basic principles of the EU taxation system.

Taxation

  • Taxation trends in the European Union

The report contains detailed statistics and economic analysis of the tax systems of the Member States, plus Iceland and Norway. You don’t of course have to read the whole report, but it would be good if you at least took a look at the statistics of your respective country.

http://ec.europa.eu/taxation_customs/taxation/gen_info/economic_analysis/tax_structures/index_en.htm

  • Who pays the most tax in the EU?

The infographic displays the disparity in taxation across the EU. Further the text explains briefly what the EU’s role is in taxation.

https://www.weforum.org/agenda/2016/03/who-pays-the-most-tax-in-the-EU/

  • The European Commission’s Taxation and Custom Unions web site

The web site contains a good overview with many subheadings, in case you want to check something specific regarding the tax system.

http://ec.europa.eu/taxation_customs/index_en.htm

  • European Commission – Fact sheet

A Q&A on The Anti Tax Avoidance Package. This should help you understand what measures the European Commission is proposing against tax avoidance and evasion, why they’re doing it and what they are trying to achieve by implementing them.

http://europa.eu/rapid/press-release_MEMO-16-160_en.htm

  • The European Commission’s Anti Tax Avoidance Package

The key elements of the Commission’s Anti Tax Avoidance Package explained.

http://ec.europa.eu/taxation_customs/taxation/company_tax/anti_tax_avoidance/index_en.htm

  • Tax Transparency: what will change

A simple overview of how the European Commission is proposing to increase the transparency of Member States information concerning tax rulings.

http://ec.europa.eu/taxation_customs/resources/documents/taxation/company_tax/transparency/taxation1.pdf

Media coverage

  • The Economist – Harmony and discord

An article from 2007 on tax harmonisation plans within the EU. Realising why a harmonised tax base i.e., wouldn’t appeal to all Member States is important.

http://www.economist.com/node/9122280

  • Press release

The European Parliament’s Committee on Economic and Monetary Affairs statement on the European Commission’s Anti-Tax Avoidance directive.

http://www.europarl.europa.eu/sides/getDoc.do?type=IM-PRESS&reference=20160523IPR28574&language=EN&format=XML

  • EU plans to tackle tax avoidance are a good start – but only a start

An article from the Guardian on EU’s plans to tackle tax avoidance.

https://www.theguardian.com/business/2016/apr/12/eu-plans-to-tackle-tax-avoidance-are-a-start-but-only-a-start

  • Press release

News on one of the European Commission’s Anti-Tax Avoidance Package’s key sectors.

http://europa.eu/rapid/press-release_IP-16-663_en.htm

  • EU tax transparency plans won’t work, say campaigners – the Guardian

The European Commission’s tax transparency plans has also been criticised. Remember to always stay neutral and critical when researching, as our goal is a resolution with a broad foundation.

https://www.theguardian.com/business/2016/mar/23/eu-tax-transparency-plans-campaigners-google-amazon?CMP=Share_iOSApp_Other

  • Google offices raided in Paris – the Guardian

Articles as this one are good when doing case studies of corporations using aggressive tax planning to minimise their tax expenses.

https://www.theguardian.com/technology/2016/may/24/google-offices-paris-raided-french-tax-authorities?CMP=Share_iOSApp_Other

Further Inspiration

  • Twitter – EU Taxation & Customs

This is the European Commission’s department for Taxation and the Customs Union’s Twitter page. It could be helpful for you to follow the latest developments of how the EU is working on the issue. Note: You don’t need a Twitter account to examine it!

https://twitter.com/EU_Taxud

  • Youtube –  EU Taxation & Customs Union

This YouTube channel is helpful when starting to explore the issue. Some of the videos explain very simply the basics of why it is important to tackle tax avoidance and how the Commission is planning to do that.

https://www.youtube.com/channel/UChFPQ0GYmGjI2d251lTRTag/featured