It’s not all bad news coming out of the European Union this month. European Union rapporteurs have made some excellent proposals on the implementation of public country-by-country reporting for multinational companies which you can read about here and here. Now we hope the EU Commission will listen and take on board their recommendations.
But, what’s not good news is that EU Finance Ministers have come up with their criteria for the identification of tax havens for their planned tax haven blacklist, which is supposed to be finalised by September 2017. Tax haven blacklists have always been farcical and politicised. If they really wanted to do this properly, the work’s already been done for them – with the best objective ranking available – the Tax Justice Network’s Financial Secrecy Index.
We’re sharing this blog which was orginally posted on 21 February by Sven Giegold MEP, one of the founders of the Tax Justice Network. The original post is here.
EU finance minister meeting: Blacklist is whitewashing tax havens
The EU finance ministers have today defined the final criteria for the identification of tax havens. In November 2016, the EU finance ministers had already agreed on rough criteria for such an EU blacklist. Today, it has been fixed how to deal with countries without or with extremely low corporate taxes. In September, the EU’s blacklist will be ready.
At their meeting, EU finance ministers also agreed on the amendments to the anti-tax avoidance directive. The EU Member States are the first to implement the OECD rules against the international misuse of hybrid constructions. The directive is to enter into force in 2020, one year later than suggested by the EU Commission. It provides for temporary exemptions for regulatory capital instruments.
MEP Sven Giegold, financial and economic policy spokesperson of the Greens/EFA group comments on the results of the EU Finance Minister meeting:
“This blacklist is an act of whitewashing. If countries with a tax rate of zero do not appear on the blacklist, it is not worth the paper it’s written on. The criteria for the identification of tax havens are a bad joke: a country which allows profit shifting of companies and exempts these profits from taxation will not be considered a tax haven. The Council’s agreement clearly falls behind the Commission’s proposal. Tax havens that attract companies without significant corporate taxes will not appear on the blacklist of the future EU. These countries are to be assessed according to the harmfulness criteria of the Council’s “Code of Conduct Group on Business Taxation”, even though this working group has not even been able to prevent tax dodging within the EU in recent years. As the working group does not meet in public and decides unanimously, the political in-fighting will take place without public scrutiny. In September, an empty black list will be presented, on which all relevant financial centers will be missing.
he agreement reached by the EU finance ministers on amendments to the anti-tax avoidance directive is a major step forward in the fight against tax avoidance. Europe is thus playing internationally a pioneering role in the fight against tax avoidance by large companies. The debate has also revealed, which EU member states have their foot on the brake. It is unacceptable, that the Netherlands have been able to delay the entry into force of the rules against the tax breaks for one year. However, neither the Netherlands could not win their claim for a five-year postponement and nor the UK’s demand for further exemption for banks and insurance companies had been successful.”
Please find preliminary results of the EU’s work on the blacklist for tax havens here.
Please find the amendments to the anti-tax avoidance directive as regards hybrid mismatches with third countries (ATAD 2) here.