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EU finance ministers to meet after ‘Paradise Papers’ leaks
EU finance ministers are set to discuss setting up a blacklist of worldwide tax havens on Tuesday, officials said, after leaked documents from an offshore law firm exposed new high-profile cases of tax avoidance.
The decision to include the subject in the monthly meeting’s agenda came after the publication over the weekend in several media of the so-called Paradise Papers, a trove of leaked financial documents mostly from law firm Appleby that exposed dealings with tax havens by top public figures.
EU countries had planned for months to reach an agreement on a blacklist for tax havens by the end of this year and the new revelations prompted an earlier discussion on the subject, EU officials said.
In the wake of earlier revelations on widespread tax dodging, like the so-called Panama Papers or Luxembourg Leaks, the EU discussed several measures to crack down on tax avoidance, including 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.
Smaller EU states, like Luxembourg, Malta and Ireland, attract firms with lower corporate taxes. Some have been sanctioned for deals with multinationals that slashed their tax bills reducing revenues in other EU states.
To win over their resistance, the proposed EU blacklist would apply only to non-EU countries. 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.