As EU finance ministers prepare to revise the European blacklist of non-cooperative tax jurisdictions on Tuesday, 12 March, Oxfam unveiled its own forecasts in a report on Thursday, 7 March, suggesting that several well-known tax havens may soon be taken off the EU radar.
Following the current criteria for listing or delisting, Oxfam has concluded that the Bahamas, Bermuda, the British Virgin Islands, the Cayman Islands, Guernsey, Hong Kong, the Isle of Man, Jersey and Panama could be removed from the 'grey list' of countries that have made commitments to reform their tax practices even though they have recently found themselves in the middle of tax scandals.
For Johan Langerock, Oxfam tax advisor and author of the report, these countries are smart and know how the list works, but the reforms they have put in place are far from sufficient, he explained on Wednesday, during a presentation of the report to the press.
The 'blacklist’, established in December 2017 (see EUROPE 11919/1), currently includes only five countries, namely American Samoa, Guam, Samoa, Trinidad and Tobago and the American Virgin Islands, while 63 countries are on the 'grey' list.
According to Oxfam’ s forecasts, the EU plans to remove a total of 23 countries from the 'grey' list, keep 29 already present and add three, bringing the 'grey' list to 32 countries.
As for the blacklist, the organisation estimates that it could contain 23 jurisdictions. The five countries currently listed should remain there and 18 countries could move from the 'grey' to the 'black' list, namely: Bahrain, Cape Verde, Cook Islands, Dominica, Fiji, Grenada, Marshall Islands, Morocco, Nauru, New Caledonia, Niue, Oman, Palau, United Arab Emirates, The Turks and Caicos Islands, Saint Kitts and Nevis, Turkey and Vanuatu.
Some countries may appear on both lists at the same time, the organisation said, citing the example of Cape Verde, which had not reformed its harmful tax practice by December 2018, but still has until December 2019 to comply with transparency criteria.
According to the author, these forecasts would be reliable for countries removed from the 'grey' list and probably a little less so for the number of countries added to the blacklist. According to a European source, the blacklist should contain around 15 countries.
The EU should start by putting its own house in order
The report also denounces a certain hypocrisy on the part of the EU and shows that, if it applied the current criteria to its own Member States, five countries would appear on the blacklist, namely: Cyprus, Malta, Ireland, Luxembourg and the Netherlands.
These five countries have harmful tax practices and disproportionate profits, Chiara Putaturo, Oxfam’s EU tax policy advisor, explained. The most striking example is Luxembourg, where the amount of foreign direct investment entering and leaving the country amounts to more than 8,000% of its GDP.
In its report, the organisation also makes several concrete recommendations to make the European blacklist a “powerful tool against tax avoidance”, including: - revising and strengthening the fair taxation criterion; - including as a separate criterion low or zero (effective) tax rates; - broadening the definition of harmful tax practices; - reforming the Code of Conduct Group in the EU Council to increase transparency and make the process more objective.
The report can be found here: https://bit.ly/2tX7B7K. (Original version in French by Marion Fontana)