Call for Europe to widen tax haven net to include EU culprits

Richard Wachman
Oxfam activists stage a satirical street-play mimicking wealthy people hidding their money in tax haven, in this December 5, 2017 photo, near the European institutions in Brussels, within a meeting of European Union ministers over a credible blacklist of non-EU tax havens. (AFP)

LONDON: The EU is coming under mounting pressure to include countries within the bloc in its global crackdown on tax havens.
In the European Parliament, the Socialists and Democrats group has tabled an amendment demanding that Luxembourg, the Netherlands, Ireland and Malta — all EU members — should be written into the EU tax haven list.
Richard Murphy of Tax Research told Arab News: “There is plenty of evidence to suggest there are companies in those countries that have no economic substance and are established for tax purposes only.”
He added: “If we want to fight tax avoidance credibly on a global stage, we must also put our own house in order. Why should we care less about states inside of our union that have turned stealing our taxes into their business model?” The UAE, Bahrain and Tunisia were among 17 countries named as facing sanctions following the EU probe. But critics have said the list is undermined by being too selective and turning a blind eye to a number of other countries that should also have been penalized.
The UAE issued a strongly-worded statement saying it was surprised to be included in the list and had “worked transparently with European Union counterparts to ensure that we meet the criteria laid down by European Union Member States.”
Peter Simon, on behalf of the Socialists and Democrats group in the European Parliament, said according to the most recent OECD data on foreign direct investment, Luxembourg and the Netherlands together have more inward investment than the US, “and that the vast majority of these investments are in special-purpose entities with no substantial economic activity.”
He pointed out that of all the corporate investments ending up in tax havens, a total of 23 percent passed through the Netherlands, according to research by the University of Amsterdam.
Simon said the data provided clear indication that EU member states were “facilitating excessive profit-shifting activities, which comes at the expense of other European member states.”
“We therefore call on the European Commission to regard Luxembourg, the Netherlands, Ireland and Malta as EU tax havens.”
Murphy said: “I support the call. These places all deserve that status in their own right and it is good to see there are some politicians who are willing to stand up and say so.”
The EU’s original blacklist of tax havens —  which included South Korea, St. Lucia and Barbados — was published on Dec. 5, 2017.
It also put 47 countries on a so-called “grey list” as they had promised to change their tax rules to meet EU standards; these included Hong Kong, Jersey, Bermuda and the Cayman Islands, as well as Switzerland and Turkey.