EU’s tax haven list leaves out member states and British territories

British territories like the Isle of Man, Guernsey, Jersey and Bermuda and the Cayman Islands, were put on a "grey" list. [Kisov Boris/Shutterstock]

After intense negotiations, EU member states point their finger at 17 tax havens in a somewhat succinct blacklist that disappointed officials, MEPs and transparency activists. EURACTIV France reports.

17 countries have been labelled as “non-cooperative” by the EU’s ministers of finance and economy on Tuesday (5 December). Forty-seven more countries, whose fiscal rules are not in line with European standards but who committed to change them, were put on a “grey list”.

The list should encourage “good governance around the world, to maximise preventive efforts against fraud and tax evasion”, as part of the EU’s external fiscal strategy.

The joint initiative with OCSE and G20 has already achieved the first results, according to the Estonian Minister of Finance Toomas Tõniste, as “a number of countries have committed to meet the deadlines to take serious action based on our criteria”.

Developed countries on the grey list pledged to change their rules by the end of 2018 and developing countries by 2019.

“It is not a one-off initiative”, he said, “we will review the list in the coming years. Our goal is to make good fiscal governance the norm.”

Valdis Dombrovskis, vice president of the Commission, assured that the EU executive will closely monitor the progress of the countries on the grey list. And if they do not respect their commitments, “they will end up on the blacklist”.

The Commissioner did not hide a certain disappointment with regard to the Council’s decision. On Twitter, he said he would have preferred stronger measures and hopes that they will see the day in 2018.

The decision to publish this blacklist was taken in November 2016, following calls for more tax justice after the multiple scandals of Luxleaks and Panama papers. The Council established three criteria: transparency (automatic exchange of information), fairness (absence of harmful preferential measures) and the application of OECD measures against aggressive tax optimisation.

It then took a year of investigations and negotiations between countries to come up with a blacklist. It is much more extensive than the one that was published this summer by the OECD and contained only one name: Trinidad and Tobago.

On the EU list, we find Bahrain, Barbados, South Korea, United Arab Emirates, Grenada, Guam, Macao, Marshall Islands, Mongolia, Namibia, Palau, Panama, Saint Lucia, Samoa and American Samoa, Trinidad and Tobago and Tunisia.

Countries on the “grey list” committed to a number of actions to be de-listed. Territories with ties to the UK (Bermuda and the Cayman Islands, Guernsey, Jersey and the Isle of Man) were included in this section and committed to “introduce substance requirements.”

Oxfam challenges EU by publishing alternative tax haven list

A week before the Commission is expected to adopt a blacklist of tax havens, anti-poverty organisation Oxfam threw down the gauntlet by publishing its own list of 35 countries, which includes four EU member states and four EU hopefuls from the Western Balkans.

Selection criteria

The activists for tax justice are outraged that no investigation has been carried out on EU member states. For them, Luxembourg, Ireland, Malta and the Netherlands do not respect European rules and should therefore be included in the list of tax havens.

“The list cannot be limited to third countries but must include some European jurisdictions,” Markus Ferber, vice president of the European Parliament’s Economic Committee, said in a statement.

Alain Lamassoure, a centre-right (EPP) MEP, also thought the list was a bit short. But for him, “the big news of the day is that Ireland has been forced to make Apple pay $13 billion of tax arrears. It’s a major victory in the fight against the madness of global tax planning. ”

Ireland makes U-turn, says will collect €13 billion back taxes from Apple

The Irish government has reached an agreement with Apple to start collecting the €13 billion owed by the tech giant, it announced on Monday (4 December).

The NGO Transparency International voiced regret that the criteria for selecting the pinned countries and the negotiations between member states to know what was or was not a practice to be condemned were also secret.

“For this blacklist to be effective, the EU Council needs to be transparent about the selection process by disclosing how it screened jurisdictions, as well as the minutes and documents of the negotiations between the EU and the territories which went through the screening process,” said Elena Gaita, Policy Officer for Corporate Accountability at Transparency International EU.

Principle of sanction

For this list to have practical effects, it is necessary to change the way the EU treats these states. Countries on the blacklist could be deprived of European funds, and other sanctions could come, announced French Minister of Finance Bruno Le Maire.

“The application of sanctions is certain,” he assured after the meeting. “I also asked the Commission this morning […] to quickly define the sanctions that will affect these 17 states.”

For him, “these sanctions are also a question of credibility for the European Union”.

An opinion shared by Pierre Moscovici, Commissioner for financial and economic affairs:

“The adoption of the first ever EU blacklist of tax havens marks a key victory for transparency and fairness. But the process does not stop here. We must intensify the pressure on listed countries to change their ways. Blacklisted jurisdictions must face consequences in the form of dissuasive sanctions, while those that have made commitments must follow up on them quickly and credibly. There must be no naivety: promises must be turned into actions. No one must get a free pass.”

EU adopts list of 17 tax havens, Panama first to protest

The EU finance ministers adopted yesterday (5 December) a list of “non-cooperative tax jurisdictions”, which is another way to label tax havens.