Six major European banks explain their “tax optimisation” role to MEPs
MEPs quizzed six officials of major European banks on the role of offshore tax havens in corporate tax planning at a Special Committee on Tax Rulings II hearing on Monday. MEPs focused on the banks’ role of in facilitating aggressive tax planning for corporate clients. The bank officials said that recently-introduced measures requiring banks them to provide details of their profits and tax bills country by country have helped to promote transparency.
The six banks -- Crédit Agricole, ING Group, Nordea, Santander, UBS and Unicredit -- invited to the Tax Committee meeting were selected because, according to committee chair Alain Lamoussoure, they represented a "balanced sample" of European Banks. They are also some of the largest financial institutions in Europe, with assets and corporate clients worth billions of dollars. Some have been embroiled in legal action with national governments over tax affairs.
Country by country reporting
The banks welcomed the recent EU directive which took effect in 2015, which requires credit institutions and investment firms to disclose annually their profit or loss before tax, as well as tax paid, on a country by country basis. The measure is designed to prevent corporations from shifting profits across borders, often through tax havens, with the aim of reducing or eliminating the tax that they pay.
Tax: obeying the letter and the spirit of the law
The banks rejected suggestions that they help corporate clients to reduce their tax bills. They insisted that when it came to paying taxes themselves, or in connection with their clients' businesses, they not only followed the letter, but also the spirit, of the law. Others, such as Santander, went further, insisting that they provided clients only with a banking service, not with tax advice.
One MEP raised the subject of a report issued earlier this year by the charity, Oxfam, which warned that the EU's measures to combat tax avoidance would fail to end tax havens. The banks -- many of which have branches in tax jurisdictions -- rejected suggestions that they used offshore investments to shelter profits.
Watch the debate on VOD. (Click on 21 March 2016)