EU hopes to have blacklist of tax havens

Ⓒ AFP/Archives – EMMANUEL DUNAND – | The headquarters of the European Commission, 16 October 2017 in Brussels

The 28 EU finance ministers are meeting in Brussels on Tuesday in the hope of having a black list of about 20 tax haven names operating outside their borders, a first for the Union.

Until the very last moment, this list, eagerly awaited after the recent scandals that revealed different systems of tax evasion – “LuxLeaks” at the end of 2014, “Panama Papers” in April 2016 and “Paradise Papers” in November 2017 – should still be the subject of negotiations between the Member States.

Because, according to the European rules on fiscal matters, the 28 must agree unanimously on the name of the countries “blacklisted”.

Several sources told AFP on Monday that two lists of countries should be published Tuesday: a first “black” list, comprising around twenty jurisdictions (a source of 19) and a second “gray”, with 45 other are committed to improving their practices.

“This could change further during the meeting on Tuesday morning, ministers could remove one or two countries blacklisted,” said one of the sources to AFP. Thus, according to another, the Cayman Islands, likely to be on the blacklist, should now be placed on the gray list, after promising reforms.

Ⓒ AFP/Archives – Thomas SAINT-CRICQ – | Offshore investments around the world

Of those who have decided to comply with EU demands, developed countries have until the end of 2018 to do so and developing countries until the end of 2019.

As for possible tax havens in the Caribbean devastated by hurricanes last September, they have an additional period until the spring of 2018 to provide information.

The blacklist should in any case be regularly updated, according to several European sources.

On Friday, a senior EU official said the blacklist would include at least ten countries. That would be more than the OECD’s blacklist (the Organization for Economic Co-operation and Development), which had pinned a single country this summer: Trinidad and Tobago.

Supported by the European Commission, which has been pushing for the establishment of this list for two years, the 28 member states have screened a total of 92 jurisdictions (states and territories, ed) that could pose a problem – sometimes tiny islands – -, by the yardstick of three criteria:

– The first is fiscal transparency: do they practice or not the automatic exchange of information?

– The second, tax equity: do they apply or not, for example, preferential tax measures harmful?

– The third: do they implement or not the OECD measures against aggressive tax optimization?

– Sanctions ? –

At the time of the elaboration of the criteria, some EU Member States had argued that a zero corporate tax rate should also be taken into account, but others like the British opposed it.

Last February, the 28 had finally agreed that the zero tax rate should simply be identified as an “indicator” in the assessment of a jurisdiction.

Last Tuesday, the NGO Oxfam published its own list, revealing that at least 35 countries meet the criteria selected by Europeans, including “notorious tax havens like Switzerland and Bermuda, but also Jersey or New Caledonia” .

Oxfam also pointed to four European countries: Ireland, Luxembourg, Malta and the Netherlands, which should be on the same list if the European criteria were applied to them.

Tuesday, European countries should match their blacklist of a possibility of sanctions.

Among the punitive measures evoked, “one can imagine the refusal that pinned jurisdictions access certain programs or some EU funds,” observes a European source.

Here again, the 28 of the EU do not agree among themselves: a first bloc composed of Belgium, France, Austria, Germany, Romania, Italy, Spain, Portugal Slovenia and the European Commission are calling for tough sanctions.

Another bloc – the United Kingdom, Malta, Sweden, Ireland, the Netherlands, Luxembourg, Lithuania, Finland and Greece – is calling for more flexible sanctions, which would mainly involve increased surveillance of pinned states.

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