German finance minister urged to offer clarification on tax fraud scandal

Source: Xinhua| 2018-10-27 05:27:26|Editor: yan
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BERLIN, Oct. 26 (Xinhua) -- German opposition parties have made a public demand on Friday for finance minister Olaf Scholz to prove a comprehensive clarification on the ongoing Cum-Ex tax fraud scandal and the massive losses suffered by European fiscal authorities as a result thereof.

The Greens (Gruene) and Left Party (Linke) are formally calling for a "rapid discussion of the Cum-Ex topic by the parliamentary financial affairs committee under invitation of the federal finance minister Olaf Scholz", a letter sent by the financial policy experts Gerhard Schick (Gruene) and Fabio De Masi (Linke) to the committee read.

The "Cum-Ex" scandal is widely considered to be the largest tax fraud scheme in German history. As initially revealed by journalists from the newspaper "Die Zeit", domestic and international banks as well as some investment funds used loopholes in stock trading regulations over the course of several years to strip the German state of billions of euros.

Official estimates put the total damage caused by the fraudulent practices as high as 31.8 billion euros (36.1 billion U.S. dollars). Specifically, scores of lawyers, lobbyists, and banking staff were found to have assisted their clients with two lucrative "Cum-Cum" and "Cum-Ex" methods of diverting funds from taxpayers.

"Cum-Cum" is a still legally-disputed practice whereby financial institutions help foreign investors in securing tax rebates they are not entitled to. "Cum-Ex" is more complex and was officially outlawed in 2015. Following this approach, a tax bill is settled by the owner of stocks once, before being claimed as a refund twice, or even multiple times. The profit thus achieved is then split again between the parties to the transaction.

A long list of major banks, including Citigroup, Barclays, and Deutsche Bank, were found to have participated in and benefited from the multibillion-euro scheme.

"The biggest tax theft in European history is acquiring increasingly extreme dimensions. And what is the federal government doing? It is slowing down, blocking and keeping silent," Schick complained on Friday.

Aside from opposition party criticism, the German government has recently also been accused by Denmark of failing to provide an adequate warning that it was also being targeted with Cum-Ex practices.

Shortly before the request by Greens and Left party for a parliamentary discussion, Danish tax minister Karsten Lauritzen urged Scholz to clarify why related information obtained by German authorities back in 2012 was not shared with its fellow European Union member.