European Union finance ministers will tomorrow discuss setting up a blacklist of worldwide tax havens, EU officials said.
This comes after leaked documents – the Paradise Papers – from an offshore law firm revealed investments by wealthy individuals and institutions around the globe.
EU countries had planned for months to reach an agreement on a blacklist for tax havens by the end of this year.
The new revelations prompted the discussion to be brought forward, EU officials said, but no final decision was expected tomorrow.
The EU has discussed several measures to crack down on tax avoidance in the past, including in the wake of the “Panama Papers”, a release by the ICIJ last year which chronicled a shadowy world of offshore holdings and hidden wealth.
Measures previously discussed include an EU-wide list of tax havens meant to discourage the rerouting of profits made in the EU to tax-free or low-tax countries, like Panama or Bermuda.
At the moment, each EU country has its own list of jurisdictions that are seen as less cooperative on tax matters.
Criteria to define a tax haven vary greatly among EU states and some of them include no jurisdictions in their national blacklists.
An EU blacklist is believed to carry more weight. Jurisdictions included in the list could be subject to sanctions if they did not cooperate.
There are no details yet of the type of sanctions to be discussed, although being on the blacklist in itself could discourage individuals and companies from putting money in those jurisdictions.
Some EU countries remain sceptical about the blacklist and are themselves under scrutiny for unfair tax competition. To win over their resistance, the proposed EU blacklist would apply only to non-EU countries.
The Minister for Finance, Paschal Donohue, has said Ireland will continue to play its role in dealing with the issue of aggressive avoidance of tax.
Also, states which charge no corporate taxes will not be automatically considered tax havens, under a preliminary deal reached by EU finance ministers last year.
On tax matters the EU can take decisions only with the unanimous backing of its 28 member states, unless extraordinary procedures are launched – an option never tested so far.
To reduce the appeal of tax havens, Brussels has also proposed the setting up of public registries that would show the real owners of companies, which are often hidden by frontmen in shell firms in offshore jurisdictions.
It has also proposed compulsory reporting by large multinational firms of profits made and taxes paid in each state where they operate, in a bid to show how much of their revenues are booked in low-tax countries.
EU states have been long discussing both proposals, but no deal has been reached yet.
“EU governments such as Germany have been standing against the rising tide of financial transparency,” said Carl Dolan, director of Transparency
full story at https://www.rte.ie/news/2017/1106/917722-paradise-papers/