|Fabio De Masi is a new entry this year|
Fabio De Masi is a new entrant in the Global Tax 50. He is a member of Germany's Die Linke party, part of the European United Left-Nordic Green Left in the European Parliament. De Masi served in the European Parliament between 2014 and 2017 before being elected to the Bundestag in September for his Hamburg constituency.
As part of the German Die Linke party, De Masi is member of the only party in Germany that has a firm political platform opposing tax loopholes in Germany, and which still insists on the reinstatement of a wealth tax. He has not been afraid to speak out against tax havens or 'Steueroase made in Germany'.
In an opinion piece for German daily newspaper Frankfurter Rundschau in August 2017, De Masi wrote: "Palermo's anti-mafia prosecutor, Roberto Scarpinato, says if he was a mafiosi he would invest in Germany", and pointed out that Germany ranked ahead of Panama among the Top 10 countries in German NGO Steuergerechtigkeit Netzwerk's 'shadow finance index'.
De Masi does not mince his words when he speaks about tax dumping and money laundering and has made the fight against offshore tax evasion part of his political platform. He is also known for his involvement in pressuring Jean-Claude Juncker to reveal the missing pages of the Krecké Report in 2015 and for his undercover investigations of Panamanian law firm Mossack Fonseca.
He calls for "brutal transparency for shell companies and corporate profits, effective minimum tax rates for businesses and potent penalties for tax evaders".
De Masi unabashedly voices his demands for tax transparency and the legal reforms needed to implement fair taxation in the EU.
Before his move from Brussels to Berlin, he also served as vice-chair for the European Parliament's Committee of Inquiry into Money Laundering, Tax Avoidance and Tax Evasion (PANA) on money laundering, tax avoidance and tax evasion. International Tax Review spoke to him about his work as the vice-chair of the PANA committee and his continued political work on the promotion of tax justice.
International Tax Review: How would you evaluate the success of the PANA committee? What type of governance changes do you think it was able to introduce?
Fabio De Masi: The European Parliament cannot directly legislate corporate taxation and is only a co-legislator for anti-money laundering measures. The PANA committee (see page 51) can tell a story and issue recommendations. The council and the EU Commission are blocking rights of inquiry committees such as to summon witnesses under oath or access to relevant documents. However, if the PANA report reaffirms the demands of the European Parliament for the current revision of the anti-money laundering directive such as closing loopholes for nominee directors, making grave tax crimes a predicate offense and calling for tougher sanctions, we can maintain public pressure. I am particularly proud that by my initiative to invite Elise Bean – a previous Global Tax 50 nominee and former chief of staff of the permanent committee of investigations of the US Senate – there is a stronger commitment in the European Parliament to form a permanent committee on taxation. I hope Parliament will gain a majority for that among the leaders of political groups as further tax leaks are to be expected.
ITR: It is easy to show outrage over money laundering scandals and offshore tax havens but it takes more courage and good arguments to call out tax loopholes in developed economies. Will you continue to address these issues in the Bundestag?
FDM: I expect to continue my work in the financial affairs committee of the Bundestag. Larger economies such as Germany or the Netherlands may even do more harm than notorious Caribbean islands or small member states such as Luxembourg. According to the German Federal Police (BKA) our weak anti-money laundering laws, especially in the real estate sector (e.g. share deals), make Germany a prime destination for dirty money including money that is used for terror finance. Other areas of concern are the lax treatment of undeclared interest income from foreigners, a weak sanction regime and the absence of a corporate criminal law for banks assisting in tax evasion or money laundering and the resistance of the German government to support public registers of true beneficial owners and public country-by-country reporting (CbCR).
ITR: What are some of the milestones you are looking to achieve during your term?
FDM: It is unlikely that 28 EU member states will agree in tax matters. Hence, we will only see relevant progress in of corporate taxation if larger member states such as Germany and France threaten to penalise financial flows to low-tax jurisdictions by source taxation. This may become especially relevant with Brexit and UK attempts to further slash corporate tax rates.
The EU lacks a competence for corporate taxation and all tax issues are dealt with within the narrow remit of competition law and the state aid regime.
The system of transfer pricing is overly complex and outdated as intangibles such as patents can hardly be priced. Even the EU Anti-Tax Avoidance Directive leaves too many loopholes. Hence, we will only see relevant progress if we treat multinational corporations as single entities and account for their profits at EU level. Then it wouldn't matter anymore if they shift profits across borders into letterbox companies. However, the current common corporate tax base (CCTB) proposals may even further reduce the tax base as they provide for cross-border loss recognition prior to consolidation of profits. Hence, a source taxation seems a reasonable alternative.
ITR: Could you name a few successful outcomes of your campaigns for tax justice and tax transparency?
FDM: I think we achieved a broad consensus among many national parliaments for greater tax transparency such as public CbCR as already introduced for the banking and extractive industries. That is a prerequisite to detect patterns of tax avoidance and hence bad laws. Although the EU Commission wants to limit CbCR to commercial activities of companies in EU member states and the European Parliament introduced a very generous loophole for commercially sensitive information, we will continue to push for more ambitious reforms. Therefore, I am part of the Global Tax Transparency Network of parliamentarians from all over the world.