Paradise Papers Leak Prompts EU Discussion Over Tax Havens
EU officials have confirmed that finance ministers will be meeting to discuss a tax havens blacklist. The talks follow the recently leaked documents “The Paradise Papers”. The papers, which were leaked from an offshore law firm, reveal investments from wealthy individuals and companies, The papers also provide a lot of insight into how some of the most powerful and influential names invest their money offshore to avoid paying tax on their earnings.
The release of the Paradise Papers comes at a time when tax avoidance is already of great concern to the public. It comes only a year after the release of the “Panama Papers”, which detailed wealth hidden in different offshore holdings; as well as a report leaked by the Irish times revealing how individuals hide their money in offshore accounts to avoid tax.
These new revelations mean that discussions have become much more urgent, and it’s been decided by officials that talks need to be brought forward as a priority. The proposed blacklist is currently under discussion, and the EU hopes to reach an agreement by the end of this year. According to Carl Dolan, director of Transparency International EU “EU governments such as Germany have been standing against the rising tide of financial transparency”
What are measures the EU is proposing?
Some of the proposed measures including in the discussion include providing a list of low tax EU countries, which would discourage profits made in the Europe being invested in non EU tax havens like Bermuda or Panama. With each EU country having its own individual tax laws, it can be difficult for investors who see non EU countries are more cooperative. A new EU blacklist could also include sanctions if individuals and companies didn’t cooperate with it. The types of sanctions that could be included have yet to be discussed.
There is some opposition to a tax haven blacklist within the EU, and that’s due to some member states being under scrutiny themselves over tax laws. For example Luxembourg, the Isle of Man and Jersey have all been named in the leaked documents. The answer could be to only blacklist non EU states, as this could mean much less resistance.
Brussels are also proposing setting up public registers to show the real owners of companies – not just the front men and shell companies. Another proposal is forcing companies to submit reports showing their profits, taxes they’ve paid and the countries they are registered in, which would show how much of their profits were registered in low tax or no tax countries.