EU Countries Fall Short Of Their Promises To Stop Tax Havens

Today, European ministers updated the EU’s list of tax havens. The update added no countries to the blacklist and 10 countries to the greylist.

In response, Chiara Putaturo, Oxfam EU’s tax expert, said:

“A year ago, Open Lux uncovered the secrets of tax havens existing in Europe. Eight months later, the bombshell of the Pandora Papers made headlines around the world for blowing the lid on how the super-rich use tax havens to escape their tax bills. This week, a historic leak of Swiss banking records revealed how criminals, fraudsters and corrupt politicians used the secretive Swiss banking system to stash over US$8 billion in assets. Yet, none of this made a dent in EU rules on tax havens. The updated list does not challenge the persistent weaknesses of the process which exempts EU tax havens, and leaves secrecy jurisdictions, like Switzerland and the US, and zero tax rate countries, like the Cayman Islands, off the hook. Meanwhile, poorer countries, like Tunisia and Vietnam, are at risk of being blacklisted for not complying with top-down designed standards.

“Greylisting the Bahamas, Bermuda and the British Virgin Islands means some real tax havens will be put under the magnifying glass. However, as long as the criteria are not reviewed, these countries can continue to operate as tax havens without any repercussions and can easily be completely delisted in the next review.

“How many more tax scandals must happen before the EU commits to a real reform? The current process is full of holes, lacks credibility and fails to put an end to tax avoidance. It is time for the EU to automatically blacklist zero and low tax rate countries, and to hold EU countries up to the same level of scrutiny as non-EU countries. The EU should also not use the blacklist in the future to force poorer countries, like Nigeria and Kenya, to sign up to the unfair OECD tax deal.”

Notes

• Today, European governments published a revised EU tax havens list. The blacklist remained unchanged. The greylist added 10 countries. They are on the greylist as they fail to fulfil at least one of the criteria.
• Read Oxfam’s December 2021 tax briefing for background on why and how the EU should reform their rules on tax havens. It includes what criteria should be on the list and why the EU’s proposal to introduce a criterion requiring countries to sign up to the OECD BEPS2 tax deal is unfair to poorer countries.
• Last December, EU countries failed to agree on the reform of the Code of Conduct for Business Taxation. This failure undermines the ability to make progress in reviewing the definition of harmful tax regimes (Code of Conduct for Business Taxation) and the listing criteria (based on that definition) as put forward by the European Commission’s Communication on tax good governance.
• The current blacklist does not include a single one of the world’s 20 worst corporate tax havens identified by Tax Justice Network in 2021, nor does it include any of the world’s 15 worst corporate tax havens identified by the still relevant 2016 Oxfam analysis. Among the 12 countries in the world with a zero per cent tax rate, none are blacklisted and 6 are now greylisted.
• In previous analyses, Oxfam showed that some EU countries have characteristics of tax havens.
• On Sunday, a journalist investigation, #SuissSecrets, revealed leaked data of Credit Suisse. It shows how the bank has helped problematic customers to hide large sums of money and how this practice is embedded in the Swiss secrecy system.
• In the last year, two tax scandals have shown the weakness of the EU list: OpenLux and the Pandora Papers. OpenLux showed how tax havens exist in the EU, and the need for the EU to get its house in order. The Pandora Papers showed that some US states have become hubs of financial and corporate secrecy. The US is not compliant with the EU’s tax transparency criteria because it has not joined the Common Reporting Standard (CRS) and does not fully exchange information with other countries.
• The EU has listed several low-income countries for failing to comply with international standards. This is despite these countries not being included in the discussions to set these standards or not having the capacity to implement the requirements to avoid being blacklisted.

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