PARIS — Massive leaks of tax and financial information such as the Paradise Papers can serve as “an electroshock” forcing politicians to act against tax avoidance, European Commissioner for competition Margrethe Vestager said in an interview with French newspaper Le Parisien.
“We need these scandals … to initiate change,” Vestager explained, adding: “Thanks to those disclosures, people’s anger served as fuel to accelerate decision-making at the European Council.”
Vestager cited as examples the fact that national tax authorities must now inform the European Commission of any secret deals granting foreign multinationals preferential tax treatment and separately that big corporations must now detail their country-by-country financial results.
This week, a string of organizations coordinated by the U.S.-based International Consortium of Investigative Journalists have published a trove of leaked documents showing how wealthy individuals and big corporations use offshore investments through exotic tax havens to lower their tax bills.
According to the so-called “Paradise Papers,” the beneficiaries of off-shore funds include individuals as diverse as Queen Elizabeth, U2 singer Bono and French luxury tycoon Bernard Arnault. There is no suggestion these investment arrangements are illegal.
The EU commissioner acknowledged that much remains to be done to tackle tax avoidance, mostly engineered through legal means taking advantage of the complexity of tax laws and competition between national jurisdictions.
Vestager said she was pushing for tax statements of multinational companies to be made public, and called for the activities of enablers such as big law firms to be put “under the spotlight.”
“The middle class and small companies pay their taxes. No lawyer ever comes knocking on their door to offer the latest Bahamas tax scheme,” she said.