Britain water down EU anti-tax haven measures days after Paradise Papers revelations

The British government pushed to water down key parts of an EU crackdown on corporate tax havens at a European Council meeting this week, days after the Paradise Papers leak revealed more evidence of tax dodging in UK overseas territories.

Ahead of Tuesday’s ECOFIN meeting of European finance ministers, EU commissioner Pierre Moscovici had called for countries to “rapidly adopt a European tax haven list” in light of the revelations, as well as arguing that such a list should be enforced with “credible and meaningful” sanctions.

The UK, however, is reported by Politico to have teamed up Luxembourg and Malta to push back against the inclusion of such sanctions, which would likely include British territories such as Bermuda and the Cayman Islands, which were implicated in the Paradise Papers.

“This time we have to point the finger at Britain,” said Sven Giegold, the European Parliament Green group’s finance spokesperson, reacting to the latest leak.

“With its overseas territories, Great Britain dominates the map of tax havens. Britain is one of the world’s largest tax havens. Within the EU, the British government has for years been slowing down the EU’s fight against tax avoidance and money laundering. 

“The British are particularly sceptical about the EU’s black list of tax havens, for self-protection. It takes a lot of British humour to understand that Caribbean islands with a corporate tax rate of zero per cent should not be tax havens, according to the EU definition. We must make best use of the Brexit negotiations to close the UK’s tax havens.”

British Green MEP Molly Scott Cato said: “Once again, the UK and its offshore territories are at the heart of things. This makes it all the more outrageous that the UK is among the countries blocking progress on the future EU blacklist. 

“If the UK is to have a positive future trading relationship with the EU, it is going to have to clean up its act when it comes to tax.”

Valdis Dombrovskis, vice-president for financial services, told reporters in Brussels after the meeting that he hoped more progress could be made on the issue at the next finance ministers’ meeting in December.

“Today we also discussed the EU blacklist for non-cooperative tax jurisdictions. The work on the list is ongoing as planned,” he said.

“We call for an agreement on the list at the 5 December ECOFIN, but we also call for an agreement on countermeasures against those jurisdictions that will end up on the list. Only then this exercise will be credible and meaningful.”

The British Government has previously said it does not believe it is fair to refer to its overseas territories as tax havens, despite a number playing a central role in the Panama Papers and Paradise Papers, and having zero per cent rates of corporation tax.

It says it is supporting the creation of the blacklist, but debate remains in the EU about whether it should come with enforceable sanctions.

The Financial Times reported that around 53 territories have been warned via letter to make changes to their tax code, unless they want to appear on the list when it is expected to be finalised in December.

A previous EU tax haven blacklist released in 2015 was withdrawn after criticisms that it was arbitrary and omitted a number of EU states with secretive tax practices.

The new list being drawn up is to based on a set series of criteria, whereby countries are not allowed to offer preferential tax measures or profit shifting.

A Treasury spokesperson said: “The UK is at the forefront of tackling avoidance and ensuring tax transparency. We support the development of a blacklist and are working with our European partners. Our goal is to finalise a common EU blacklist by the end of 2017.”

FROM INDEPENDENT.com