People in Europe and in developing countries are being robbed. One trillion euro is lost to tax dodging every year in the EU, with billions being lost from developing countries each year for the same reason. It begs the question: how is it possible to keep a trillion euro out of sight of tax authorities? One of the answers is corporate secrecy in the form of anonymous companies and trusts.

There is a raised awareness and heightened frustration on the issue of corporate tax-dodging in Ireland and globally, and its cost to the public purse. The Government’s phasing out of the “double Irish” tax loophole in Budget 2015 only to replace it with a range of other tax incentives for multinationals, the ongoing European Commission investigation into Apple’s tax arrangements with Ireland and last week’s “LuxLeaks” revelations have only increased this. However, this awareness has not yet led to changes in the underlying causes of the problem, including the lack of transparency and co-operation between governments.

The Government’s apparent reluctance to establish a public register of the beneficial owners of companies and trusts is an illustration of this. Anonymous companies and trusts are tools for concealing funds and keeping them away from the eyes of authorities. These companies and trusts are primarily used by the rich and transnational corporations.

Of course, the majority of funds flowing through anonymous corporate structures are perfectly legitimate. But secrecy tends to attract those with secrets to keep. And when it comes to finances, this includes the world’s tax-dodgers, money-launderers, terrorist-financiers, drug lords, corrupt dictators and shady characters. As the OECD notes, “almost every economic crime involves the misuse of corporate entities”. This system of damaging corporate secrecy is thankfully under pressure. The EU’s review of its anti-money laundering directive provides a unique chance to put an end to corporate secrecy. The solution would be to ensure all member states have a publicly accessible register of the beneficial (or real) owners of companies and trusts.

Public registers

It is a solution that has brought diverse actors such as the European Banking Association and civil society together in acknowledgement that it would be the best and simplest way to expose illegitimate uses of corporate secrecy. And it is a solution strongly supported by the European Parliament. In a landmark vote of 643 in favour and only 30 against, the parliament in March this year showed that across political and national divides, support for public registers is strong.

The end of corporate secrecy is therefore within reach, but we are not there yet.

In early October, the European Parliament, commission and EU member states began regular negotiations to finally agree on the details of the anti-money laundering directive, which should conclude by December this year. But, so far, the negotiations have not gone the way that campaigners had hoped. There is a real danger the idea of public registries will be sacrificed to please a handful of blocking member states such as Luxembourg and Germany.

In a hard-hitting report released today by Debt and Development Coalition Ireland as part of a campaigning group across 15 EU states, we find the Government has so far not declared a clear position in support of a public register of the real owners of companies and trusts.

Move to transparency

As a handful of countries are close to derailing the EU effort to promote corporate transparency, this is not only counter-productive, it is shameful. The Government urgently needs to take a stand for transparency and openly call for public registers which will pave the way to fight the scourge of corporate secrecy.

Developing countries will benefit from a move to public registers. Each year these countries lose more to tax dodging than they receive in development aid. In fact, Africa is in reality a net creditor to the rest of the world, as more funds flow out of the continent than in. Addressing the secrecy that companies and trusts provide could be a key to supporting countries to secure more tax revenue from the economic activity inside their borders, and to tackling unjust flight of capital.

It is time we put an end to the absurd practice of not knowing who is behind companies registered in Ireland. In a global market economy where money- laundering, terrorism-financing and tax-dodging are a constant risk, we cannot allow corporate veils of secrecy which privilege the wealthy or criminal. They must be exposed. And Ireland must play its part in the EU negotiations by calling now for EU-wide public registers of beneficial owners, including the establishment of one here in Ireland.

Morína O'Neill is policy officer with the Debt and Development Coalition Ireland Hidden Profits: the EU's role in Supporting an Unjust Global Tax System 2014 is at www.debtireland.org