Dutchman appointed chairman of new EU watchdog on tax avoidance

Dutch PvdA MEP Paul Tang has been appointed chairman of the European Parliament’s new ‘tax committee’. This committee will investigate how EU countries lose hundreds of billions of euros annually due to tax avoidance.

“Now that governments are plunging deeply into debt due to the coronavirus crisis, this tax revenue is urgently needed as a source of income. After the previous crisis, the tax burden on the middle class was increased. We must not repeat this mistake. By tackling tax avoidance and taxing the richest and biggest polluters, we can emerge from this crisis in a sustainable way,” Tang said.

It is remarkable that a Dutchman is appointed chairman of this new ‘tax watchdog’ within the EU, given that the Netherlands has long had the reputation of being a ‘tax haven’ and cooperating in shady tax constructions and the shifting of profits by multinationals. When the Dutch MEP first raised the issue of tax avoidance in the EU, he was met with suspicion.

But since Tang succeeded last year in having the European Parliament label the Netherlands and four other EU countries as tax havens, he has worked to bring money flows within the EU under better parliamentary supervision.

According to Tang, the Dutch government loses about 22 billion euros annually due to tax avoidance. In 2019, the Netherlands was the third most important destination for foreign investments after the United States and China. This is more than major strong economies such as Japan, Canada, or Germany. However, the vast majority of these ‘investments’ consist of fake investments, according to the IMF.

Profits from all over Europe flow untaxed via the Netherlands to bank accounts in countries such as the Bahamas and the Cayman Islands where no profit tax is levied. The Netherlands has now announced it will put an end to these practices. “That is why I want to close the gaps in the Dutch tax dam through Europe, stop letterbox companies, and combat money laundering,” Tang said.

Tang’s ambition goes beyond the recently presented Dutch tax plans. He also wants to end the uncontrolled growth of tax advisors. This sector is unregulated in the Netherlands. Countries such as France, Germany, and Austria do have rules that bind tax advisors to higher standards.

Furthermore, the MEP wants companies to disclose information about their profits and taxes worldwide. Tax evasion cannot tolerate the light of day, and according to him, transparency is essential to stop these practices.