Joint CESI – UFE position on the European Commission’s fight against tax fraud and tax avoidance

As done previously, CESI and UFE, which together represent several hundred thousand employees in tax and customs administrations, met to discuss the recent initiatives of the Commission within this field to set out comprehensive recommendations.

While the organisations welcome President Juncker’s initiative making this fight a priority of the actual European Commission, and presenting over the last year several legislative proposals which are going in the good direction, these only meet half way the expectations and long-standing demands of the trade unions.

For instance, on transparency, which is a key element, the latest proposal on public country-by-country reporting is a good step forward, however the limited scope to corporate within the EU and with an annual revenue above 750 million euros (i.e. only 10% of the multinationals) is considered too restricted to have a real impact. Moreover, in order to facilitate this exchange of information, thus the work of tax professionals, CESI and UFE are of course in favour of the creation of Taxpayer Identification Numbers (TIN) which have been proposed by the Commission three years ago but are not yet established in the direct taxation area.

On the Anti-Tax Avoidance Plan, while some proposals, such as the introduction of general anti-abuse rules in double taxation treaties (DTC) and a new common list of tax havens outside the EU are positive, others, such as the interest limitation and controlled foreign company rules (CFC) are weaker than those of the OECD and seem insufficient to eliminate rulings, patent boxes, hybrid mismatches, etc.

On this occasion, CESI and UFE wish to reiterate the importance and urgency to relaunch the CCCTB allowing fair taxation and competition at the EU level. While the organisations understand the political difficulties to reach an agreement and the envisaged progressive approach of the Commission (CCTB), the consolidation part remains crucial.

The trade unions also stress the fact that the fight against tax fraud and tax evasion cannot be effective without real administrative penalties, enquiries and the protection of whistle-blowers who have proven their efficiency in revealing tax scandals.

Finally, and most importantly, the trade unions highlight once again the urgent need to invest in tax and customs administrations which, with the necessary means and staffs, can contribute to increase the revenue in the member states by reducing tax fraud and tax evasion. Investments in tax collecting rather than budget cuts are needed now more than ever.

CESI and UFE believe that with a corresponding political determination the EU can actually decrease tax fraud and tax evasion. Both organisations therefore hope that these proposals are just the beginning of fair taxation and that future measures will pick up from there and be more ambitious.

The full position will be made available in the policy positions section of CESI’s website once the position has been adopted by CESI’s Presidium. For more information please contact Agathe Smyth, Policy adviser, smyth@cesi.org.