IMPACT

‘The world has changed’: Europe targets advisers, accountants, lawyers with new tax rules

The masterminds who promote and sell tax avoidance are under fresh scrutiny in the wake of the Paradise Papers and Panama Papers.

The masterminds who promote and sell tax avoidance schemes are under fresh scrutiny after European finance ministers decided on Mar. 13 to impose tough new rules in the wake of the Paradise Papers and the Panama Papers investigations.

The rules will require tax advisers, accountants and lawyers – also known as intermediaries or promoters – to report in advance schemes that may be used by companies or individuals to avoid taxes.

Intermediaries will also be required to report any structure that may disguise the true owner of an offshore company.

Tax avoidance and evasion is a global problem that requires co-ordinated rules and collaborative action
John Peterson

European countries will share details of the schemes through a database and penalize intermediaries who do not comply, the European Commission announced. The first details will be shared among tax administrations in July 2020.

The rules emerged from a consultation launched last December by the Organization for Economic Cooperation and Development (OECD).

“The Panama Papers and the Paradise Papers have focused the public’s attention on the global reach of the tax planning industry,” John Peterson, the head of the OECD’s aggressive tax planning unit, told ICIJ.

“These leaks make it obvious to everyone that tax avoidance and evasion is a global problem that requires co-ordinated rules and collaborative action,” Peterson said.

The rules’ targets include offshore law firms such as Mossack Fonseca and Bermuda-based Appleby, the companies whose client files contained information revealed in the Panama Papers and the Paradise Papers.

Other intermediaries covered by the rules would include wealth managers and private bankers as well as accounting firms such as KPMG, PricewaterhouseCoopers, Deloitte and EY, whose tax advice to oligarchs and multinational corporations including Apple and Nike sparked furor and official probes across Europe after last November’s Paradise Papers revelations.

“The way the offshore advisory industry operates (as evidenced in the Panama and Paradise Papers) means that our rules needed to target, not only the promoters, but also the local advisers and other service providers that play a key role in the global supply chain for these type of arrangements,” said Peterson.

“The world has changed,” Peterson said.

IMPACT

House committee advances ‘once in a generation’ crackdown on enablers of financial crime

Jun 23, 2022
IMPACT

US securities regulator opens probe into Ericsson’s conduct in Iraq

Jun 09, 2022
IMPACT

Putin allies Mordashov and Roldugin targeted in latest round of US sanctions

Jun 02, 2022
Six mug shots from the Xinjiang Police Files
IMPACT

UK, US and Germany say Xinjiang Police Files offer ‘shocking’ new evidence of China’s human rights abuses

May 24, 2022
RUSSIA

New US sanctions target trust companies and corporate service providers for the first time

May 12, 2022
European Parliament
Accountability

Pandora Papers shed light on ‘gatekeepers’ of dirty money says European watchdog

May 09, 2022
ICIJ is dedicated to ensuring all reports we publish are accurate. If you believe you have found an inaccuracy let us know.