15:01 | 14/03/2018 Global Economy
European Union countries have agreed on new rules to crack down on cross-border schemes that help companies evade taxes. Tax professionals who fail to inform authorities about these ploys will be hit with penalties.
European Union finance ministers on Tuesday backed transparency measures requiring financial advisors, accountants, lawyers and banks to report "potentially aggressive tax planning arrangements" used by their clients.
The rules, which are due to come into force on July 1, 2020, are part of an effort by the bloc to shut down corporate ploys to shift profits to low-tax countries.
Information about the schemes will be compiled in a centralized database and shared among the 28 EU member countries.
"If the authorities receive information about aggressive tax planning schemes before they are implemented, they will be able to close down loopholes before revenue is lost," said Bulgarian Finance Minister Vladislav Goranov, whose country currently holds the rotating EU presidency.
'Progress for tax justice'
Tax planning intermediaries who fail to comply with the rules will risk fines or sanctions set by individual member states. If there is no intermediary involved, the onus will be on the company or individual using the tax scheme to disclose it.
EU tax commissioner Pierre Moscovici told ministers that the overhaul marked "new progress for tax justice in the European Union."
The reforms must be approved by the European Parliament before they become law.
Finance ministers also agreed to add Saint Kitts and Nevis, the US Virgin Islands and the Bahamas, to a blacklist of international tax havens, while removing Bahrain, the Marshall Islands and Saint Lucia.
The EU drew up the list in December as part of an effort to curb tax avoidance. There are currently nine countries flagged there, while a separate "gray" list includes 62 jurisdictions that have committed to change their practices and cooperate with the EU.
Anguilla, the British Virgin Islands, Dominica and Antigua and Barbuda were added to the gray list on Tuesday.
Countries on the blacklist could be subject EU funding restrictions, but member states do not agree on whether sanctions should also be implemented.