Commission to chase European tax evaders to Asia 

Tax Commissioner Laszlo Kovacs is seeking a mandate from EU member states to extend to Asia a directive  that obliges offshore tax havens to apply domestic taxes to savings held by EU citizens. 

The move comes amid signs that wealthy Europeans are looking for more distant shelters for their money in the hope of avoiding taxes after European tax havens such as Luxembourg, Switzerland, Monaco, San Marino and Andorra agreed to apply the EU savings directive, as of 1 July 2005 (see EurActiv 21 July 2004). 

The Commission has no precise figures but officials believe that German citizens could have moved as much as €500billion in offshore savings from Europe to Asia, making the most of loopholes in the directive. 

Indeed, in the first six months after the law’s implementation, officials say that Switzerland and Luxembourg respectively raised only €100 million and €4 million in withholding taxes despite the vast savings held there by EU citizens. 

Among the countries that the Commission could consider negotiating with in order to catch up with tax evaders are Hong Kong, Singapore, Bahrain, Bahamas, Canada, Dubai, Macau and Japan. 

However, private bankers are questioning the EU's capability of extending the savings directive to Asia, saying that Singapore and Hong Kong are likely to resist the move as it would go against their national interests, damaging their private banking industry. 

The Commission could nevertheless try to impose the directive on Singapore by including it on the agenda of the proposed free-trade agreement between the EU and the Association of South East Asian Nations (see EurActiv 23 August 2006).