Work Package (WP) 6: Risk Assessment and Policy Advice

WP Leader: Utrecht University, Prof. Dr. Brigitte Unger

Other Partners: Charles University

Objectives:

  • Assess the risks associated with the changes to the European Union’s Fiscal Regime driven by radical regulatory innovations
  • Provide policy recommendations to enhance the effectiveness of the European fiscal regime, which avoids (existing and newly emergent) vulnerabilities and weaknesses and redress European inequalities

Description of work:

  • The goals of this Work Package are to identify risks in the evolving European Union´s Fiscal Regime and to give policy advice.
  • To do so the work package gives an overview over existing methods of risk assessment (of both money laundering and tax evasion/avoidance risks) and – by drawing together the findings of the other work packages – provides a risk assessment of the new regulatory instruments.
  • To meet its goals the research team provides new estimates of money laundering and tax evasion using new datasets and new methods and looks at quantitative changes of money laundering and tax evasion flows over time as a reaction to regulatory innovations.
  • Furthermore, WP6 provides: a new estimate on the behaviour of tax fraudsters and criminals; a new estimate of tax avoidance; an examination of corporate tax rate competition and test whether European and other countries respond to tax rate reductions elsewhere by cutting their own tax rate; a new estimate of revenue losses from BEPS; a new estimates on the role of tax havens; new estimates for the misalignment between profits and real economic activity of corporations; new calculations for illicit financial flows from developing to developed countries; new estimates for the impact of tax evasion and tax gaps on inequalities between labour and capital; and a new analysis of the effectiveness of tax law enforcement in the 28 EU Member States with regard to money laundering.
  • WP6 will furnish scenarios for the impact of the four Darwinian devils BEPS, CbCr, AEoI and LEI on future tax revenues and compliance. Given COFFER’S focus on system trajectory we will conclude with a policy advice and a risk assessment scheme for future regulatory changes in the tax ecosystem.
  • This work draws directly on the work of the preceding work packages.

Summary:

The risks of money laundering, tax evasion and tax avoidance can stem from many different sources, like loopholes in regulation, non- compliance of countries, lack of countries’ capacity to enforce rules, lack of business ethics of companies, double role of tax experts to advise both companies to pay less tax and regulators to enforce more taxes. Working Package 6 wants to identify these risks and show how adjustments of jurisdictions, corporations, and tax experts to the new regulations affect tax evasion/avoidance and money laundering flows. With this it also wants to identify weaknesses in the new regulatory system and advise policy makers how to change or fine tune the new regulatory instruments.

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