Arab Today, arab today eu\s fight against tax havens still has far to go
Last Updated : GMT 14:33:42
Arab Today, arab today
Arab Today, arab today

EU\'s fight against tax havens still has far to go

Arab Today, arab today

Arab Today, arab today EU\'s fight against tax havens still has far to go

Paris - AFP

For more than two decades, a top French politician was able to quietly stash away hundreds of thousands of euros into a secret foreign bank account, all thanks to the lack of mechanisms that automatically and systematically help countries detect hidden accounts abroad. The case of Jerome Cahuzac, who held a secret Swiss account despite being France\'s top official against tax fraud as budget minister, has exposed the meagre measures in place despite repeated public pledges to clamp down on tax fraud and tax havens. \"The risk of getting caught for having a non-declared account in a tax haven is still next to zero,\" said Gabriel Zucman, an offshore tax fraud expert at the Paris School of Economics.He said there is a simple answer to the problem: \"an automatic exchange of information.\" For 60-year-old Cahuzac, the bubble burst only once Swiss authorities agreed to cooperate, and he confessed as evidence the account existed was about to emerge. Until then, France\'s former tax tsar had spent months denying an audio recording dug up by news website Mediapart that reportedly had Cahuzac admitting to having an account with Swiss bank UBS, believed to contain 600,000 euros ($770,000). He is now charged with \"laundering the proceeds of tax fraud\". Although the global financial crisis spurred on the international community to increase financial transparency and crack down on tax havens, the European Union still struggles to nail down offshore tax-dodgers due to the lack of sophisticated mechanisms that facilitates the automatic exchange of information.This means that investigators often need to know what they are looking for in the first place, and any requests linked to suspected tax fraud cases need to be well-founded. The allegations against Cahuzac were based on media reports and by the time French investigators got interested in the case, his non-declared funds had already been transferred elsewhere. Therefore, an administrative request made by France to Switzerland in January failed to detect the account. \"This shows that the exchange of information today only works to validate information that you already have,\" said Mathilde Dupre, a member of the Tax Justice Network which gathers experts and researchers to work against tax avoidance. To try to repair the damage caused by the Cahuzac scandal, France\'s Finance Minister Pierre Moscovici on Sunday suggested Europe look to the way Americans are dealing with off-shore tax dodgers. Adopted in 2010, the Foreign Account Tax Compliance Act (FATCA) not only requires depositors to declare their overseas accounts, but it also demands foreign financial institutions to report on the balance and activities of its US account-holders to American tax authorities. So far, Washington has struck a FATCA deal with Switzerland, and Luxembourg is on track to do so too. And on Tuesday, Britain France, Germany, Italy and Spain said in a letter to the European Commission that they had agreed to work on setting up a multilateral exchange facility modelled on FATCA which \"will not only help in catching and deterring tax evaders but it will also provide a template as to the wider multilateral agreement we hope to see in due course.\" For years, the European Commission has pushed for a directive requiring its 27 EU-members to lift banking secrecy policies for foreign depositors. Austria and Luxembourg are the only members that do not participate in an automatic exchange of information on EU residents who have bank accounts in their countries. Over the weekend, however, Luxembourg announced it was prepared to lift the controversial measure, but Austria is still blocking it, having only gone as far as to say that it is ready to discuss the issue. \"The directive is a block of cheese with lots of holes in it which is infinitely less powerful than FATCA, it\'s 10 percent of FATCA,\" said Pascal Saint-Amans, an expert at the Organisation for Economic Co-operation and Development (OECD). He also noted that automatic exchange in itself is \"very restricted\".

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Arab Today, arab today eu\s fight against tax havens still has far to go Arab Today, arab today eu\s fight against tax havens still has far to go

 



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