Tax To Go gives a snapshot of the latest political and legislative developments on taxation policy at the EU level. In this week’s issue we feature (1) EU blacklist of tax havens – down to 81 nominees (2) Whistleblower – Greens/EFA launches ‘EUleaks’, as PANA opens inquiry (3) State aid – Commission opens Luxembourg/Engie tax probe.

François Barry
Consultant

EU blacklist of tax havens – down to 81 nominees

The European Commission completed the first step of a new EU listing procedure proposed in January 2016 and endorsed by the Council in May. The document published on 15 September consists of a comprehensive set of data compiled during a pre-analysis of all third country jurisdictions in the world, to help identify the potential risk level of each country’s tax system in facilitating tax avoidance.

From 213 countries originally, 81 with concurrently 1) strong economic ties with the EU, 2) a high level of financial activity, and 3) a stable institutional/legal structure (i.e. considered by tax avoiders as a safe place to place their money) were listed in table I. For each of them and for the five countries engaged in binding transparency agreements with the EU, the Commission also looked at basic tax governance indicators, namely international transparency performance, preferential tax regimes, and a 0% tax rate or no corporate tax.

It is now up to EU member states to decide what they will do with the scoreboard. In essence they will agree on which countries should be formally screened, the criteria to screen them against – based on those proposed by the Commission last January (see Annex I), and the sanctions to be applied to those countries which will be listed. They are expected to decide all this by the end of the year, so that the screening can begin next January, with a view to drawing up an EU list of non-cooperative third countries before the end of 2017 (timeline).

The listing process will be highly political and the overwhelming majority of the 81 countries will not end up on the final list. Wide differences currently exist between member states as to how uncooperative countries are defined/assessed and how sanctions are applied. Yet the EU list is expected to cover a wider range of good governance criteria than the blacklist the OECD is currently crafting (p.11).

An EU blacklist would be a significant step towards a more coherent EU approach to working with third countries on good governance in tax matters. The list will also play a role in public country-by-country reporting since the Commission proposeddetailed disaggregated tax information to be disclosed on operations carried out in blacklisted jurisdictions.

Greens/EFA MEPs already know which countries they would like to see further screened in 2017. They also regret that the listing process only focuses on non-EU countries, just as senior MEP Werner Langen (EPP, Germany), Chair of the PANA committee, who has already called for an analysis of good governance in tax matters in EU member states to be made.

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