Senior EU official calls for crackdown on shell firms

The EU must respond to the revelations in the Pandora papers with a fresh clamp down on the use of shell companies by tax avoiders to ensure the costs of the Covid recovery are fairly shared, the bloc’s commissioner for the economy has said.

- Daniel Boffey

Paolo Gentiloni, a former prime minister of Italy, praised the “meticulous” work of journalists around the world that he said had exposed how lawmakers were being outpaced by those seeking to avoid paying tax.

Speaking at the start of a debate in the European parliament, Gentiloni said the revelations, drawn from 11.9m leaked files from firms hired by wealthy clients to create offshore structures and trusts in tax havens, demanded new legislation.

Gentiloni said: “The commission is preparing new legislative initiatives that will enhance tax transparency and bring new elements under the umbrella of automatic sharing of information to reinforce the fight against tax evasion and avoidance.

“This includes legislative proposals that we will table before the end of the year to tackle the misuse of shell companies for tax purposes. We all know through the Pandora papers what a key role these shell companies can play in tax evasion.