You are here
EU action on tax havens after Panama leaks may prove ineffective: activists
[BRUSSELS] The European Commission will propose rules on Tuesday to make companies disclose activities in tax havens, but campaigners say the measure may be toothless as EU states have no common view of what constitutes a tax haven.
The move by the European Union's executive is a response to the Panama Papers leaks. It takes the form of an amendment to a plan to make multinationals reveal how much tax they pay, and where. The plan had been for big companies to show only how much they paid in each EU state, with the rest of the world treated as a single item.
Now, EU officials say, the draft will propose that they also list how much of their money outside the EU flows through each state classed by EU governments as a tax haven. The problem, transparency campaigners say, is that there is no agreement among EU member states on the definition of a tax haven.
While many of the 28 states do have lists of jurisdictions whose tax policies they frown on, and there is an EU project to agree a common list, there is no consensus across the bloc.
"EU experience shows that member states will very probably delay or oppose the process of compiling a list of tax havens," said Florian Oel of Oxfam. He noted that the OECD, the rich nations club of which 21 EU states are members, has so far failed to agree to put any country on a tax haven "black list".
"It seems the Commission has not changed its proposal in substance," Mr Oel said.
"And it still does not offer a solution for real tax transparency."
EU tax commissioner Pierre Moscovici last week urged states to agree on a common tax haven blacklist in six months. In a letter to the Dutch presidency of the EU, seen by Reuters, Commission President Jean-Claude Juncker called for "unequivocal support" from the 28 EU states on the common list.
Anti-corruption organisations called for extending disclosure obligations to all jurisdictions to avoid the complication of defining what a tax haven is.
The Commission, which wants to apply the measure to all firms with global annual turnover above 750 million euros (S$1.15 billion), has rejected this approach, saying that its research had shown that such a rule would unduly burden companies.
"The Commission has squandered an opportunity to change the rules of the game after the Panama Papers," Elena Gaita of Transparency International said.
"This list of tax havens could be based purely on political convenience, excluding many countries. It will still allow the business of secrecy to continue as usual."
For more coverage of the Panama Papers, visit bt.sg/panama_papers.