European Parliament agrees creation of Panama Papers inquiry committee
The European Parliament voted in favour of the creation of a new Committee of Inquiry into the Panama Papers on Wednesday.

MEPs voted in the plenary session in Strasbourg to "investigate alleged contraventions and maladministration in the application of Union law in relation to money laundering, tax avoidance and tax evasion, its powers, numerical strength and term of office".

The final wording of the mandate will be decided at a meeting between Martin Schulz, President of the European Parliament, and leaders of the various political groupings before a vote by MEPs on 23 June. The inquiry is expected to begin in September and continue for a year. The Committee will consist of 65 members, and it will have 12 months to draw up a report.

European Parliament calls for crackdown on corporate tax avoidance
Also on Wednesday, the European Parliament voted on the opinion report on the Anti-Tax Avoidance Directive, which is being currently debated in the ECOFIN and is expected to be agreed upon at the next ECOFIN meeting on 17th June.

The EU Commission proposal for the Directive was welcomed by Parliament, though MEPs advocated stricter limits on deductions for interest payments and tougher rules on foreign income. They also called for more transparency for trust funds and foundations, common rules for "patent box" tax reductions on intellectual property earnings, and an EU blacklist of tax havens and sanctions against uncooperative jurisdictions.

MEPs are more ambitious than the Commission with regard to the "switch-over rule" for earnings taxed in a country outside the EU and then transferred to an EU member state. This so called "foreign income" is often exempt from taxation, so as to avoid double taxation. MEPs favour setting a minimum rate of 15%, i.e. if foreign income was taxed at a lower rate outside the EU, then the difference would need to be paid.

Further recommendations include:

  • Limiting the deductibility of exceeding borrowing costs only up to 20 % of the taxpayer's earnings or up to an amount of EUR 2 000 000, whichever is higher
  • Drawing up an exhaustive 'black list' of tax havens and countries, including those in the Union, complemented with a list of sanctions for non-cooperative jurisdictions and for financial institutions that operate within tax havens
  • Prohibiting the use of letterbox companies
  • Swiftly introducing of a common consolidated corporate tax base  (CCCTB)
  • Increasing the transparency of trust funds and foundations
  • Introducing a common method for calculating the effective corporate tax rate in each member state, so as to allow for comparison across the EU
  • A cross-border tax dispute resolution mechanism with clearer rules and timelines, to be introduced by January 2017
  • Creating a harmonised, common European taxpayer identification number  (TIN)  to serve as a basis for effective automatic exchange of information between member states tax administrations.

This proposal is for a Council directive, upon which EU member states would have to agree unanimously.

John McDonnell calls for further Government action into country-by-country reporting
Shadow Chancellor John McDonnell has written in the Guardian arguing that now is the time for this Government "to act on tax avoidance".

The piece boldly states examples of 'tax avoidance' by leading firms under the advice of Big Four accountancy firms. McDonnell states: "At a time when we have a Government insisting on brutal spending cuts, it is a moral obscenity that major corporations and the super-rich should duck out of the obligations the rest of us fulfil. In the end, this corrodes the functioning of democracy itself."

McDonnell concludes with comments on how Labour's frontbench intends to support amendments to this year's Finance Bill, which are considered to be a key element of the role of Labour's Tax Transparency and Enforcement Programme in "demanding" country-by-country reporting by multinational companies.

Further, the Labour Party has released the below statement following comments made at Tuesday's Treasury Questions:
John McDonnell MP, speaking after Treasury Questions today where the Tory Treasury Ministers refused on two separate occasions to commit Tory MEPs to support EU proposals on tax avoidance, said:

"Today the mask slipped as the Chancellor and his Ministers refused on two occasions to instruct their MEPs at the European Parliament to vote for anti- tax avoidance measures. The Tories need to put the record straight and say yes or no to whether they will support EU measures to clamp down on tax avoidance. Otherwise it clearly shows that the Tories say one thing when they think people are watching on tax avoidance but do another thing when they think no one's looking. And it further shows that a Tory Brexit would only mean that the Tories would openly work against the EU in clamping down on tax avoidance."

Guernsey publishes proposals for central register of beneficial ownership
Guernsey has published its proposals for a central register of beneficial ownership, in the form of this consultation paper.

The consultation proposes that a central register would be established and maintained by a Registrar of Beneficial Ownership, and that it would be rapidly accessible by Guernsey authorities through "legal gateways".

The Guernsey authorities will be able to disclose the information to authorities outside the island for the purposes of investigation, prevention, prosecution of offences, collection of taxes and "the carrying out of any functions of any intelligence service".

The register will not, however, be open to the public, and it will be protected both by confidentiality rules and by encryption.

The consultation ends on 8 July.

SocGen completes acquisition of Kleinwort Benson's UK, Channel Islands wealth businesses
As reported by WealthBriefing, Societe Generale has completed the acquisition of the UK and Channel Islands wealth management business of BHF Kleinwort Benson, following the announcement of the plans in March. Assets under management total £14 billion.

The deal is one of a number of M&A transactions in Europe's wealth management sector, driven by a desire among some firms to build economies of scale and boost geographic reach, while the vendors are often looking to get out of sub-scale activity, in some cases pressured by rising regulatory costs.

Written answers from the House of Commons on the Panama Papers taskforce
Jonathan Ashworth: Whether any of the staff of the cross-agency taskforce examining the Panama Papers are working only on that taskforce.
David Gauke: There are upward of 100 people currently involved in the multi-agency Taskforce, some spending more of their time working on taskforce activity than others.

Tulip Siddiq: With reference to the Answer of 12 May 2016 to Question 36479, to where the £10 million funding for the multi-agency taskforce has been allocated; and what proportion of that funding has not yet been allocated.
David Gauke: The cross-agency task force will be led by HM Revenue and Customs and the National Crime Agency in collaboration with all relevant agencies, including the Serious Fraud Office and the Financial Conduct Authority. Between them, these agencies have some of the most sophisticated technology, experts and resources to tackle money laundering and tax evasion anywhere in the world. The funding for the taskforce will be distributed as appropriate via the supplementary estimates process.

Tulip Siddiq: With reference to his Department's news story of 10 April 2016, UK launches cross-government taskforce on the Panama Papers,  (a)  how many leads the multi-agency taskforce is currently investigating and  (b)  how many of those leads have a direct link to the leaked documents relating to the operations of Mossack Fonseca.
David Gauke: The UK multi-agency taskforce has begun analytical work on all the data published by the International Consortium of Investigative Journalists  (ICIJ) , in addition to a wide range of other intelligence which includes more than 700 HM Revenue and Customs leads with a connection to Panama. As part of this work, the task force is currently analysing and reviewing the names and addresses published by the ICIJ with alleged links to the UK and Mossack Fonseca. While the sensitivity of the work means that it will not be possible to give a running commentary on any investigations, or number of investigations, Parliament will be kept updated on any significant developments.