Tuesday, November 08, 2016

Evading truth about tax evasion

The EU vowed to draw up a blacklist of tax havens following the revelations in the Panama Papers, an unprecedented leak of 11.5m files from the database of the world’s fourth-biggest offshore law firm, Mossack Fonseca. Brussels pledged to throw light on the shady “treasure islands” that help multinationals and wealthy clients avoid paying tax. The EU’s executive arm, the European Commission, has been leading the charge for greater transparency on tax havens and wants to draw up a list of “non-cooperative jurisdictions” by the end of next year and analyse risk factors intended to show whether a jurisdiction may be promoting tax avoidance. Brussels officials think that a zero or near-zero rate of corporation tax in a non-EU country should be a red flag for “unfair taxation”. Germany and France think zero rates should automatically mean a country is deemed “unfair” on taxation and goes on to the blacklist.  The UK, Ireland, Sweden, the Baltic states, the Netherlands and Luxembourg are blocking a plan to put jurisdictions with a zero or almost zero rate on the blacklist. Crown dependencies Jersey, Guernsey and the Isle of Man, as well as British overseas territories Bermuda and the Cayman Islands, are among the jurisdictions that have a zero rate of corporation tax.

Aurore Chardonnet, tax and inequality adviser at Oxfam, said the EU would be missing an opportunity by failing to target zero corporation tax rates. “The EU should be explaining to people that some jurisdictions are providing advantages to some multinationals to help them avoid paying taxes,” she said. “We cannot only blame the multinationals by doing name and shame. We need to target those countries that are helping those multinationals avoid paying tax. It is not only a matter of secrecy, it is also a matter of the tools they give to those multinationals.”

Sven Giegold, a German Green MEP, said the British government should not be allowed to set deadlines that clashed with the Brexit timetable. “It is particularly nasty that the UK does not only want to weaken the criteria of the blacklist but also wants a transitional period until 2019,” he told the Guardian. 

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