The Ecofin Council decided without debate on Tuesday 5 October in Luxembourg to remove three third countries - Anguilla, Dominica and the Seychelles - from the European Union’s ‘black list’ of jurisdictions and third countries that are uncooperative on tax matters.
American Samoa, Fiji, Guam, Palau, Panama, Samoa, Trinidad and Tobago, the US Virgin Islands and Vanuatu will remain on the ‘black list’.
The three third countries removed from the ‘black list’ on Tuesday are now included in the EU’s ‘grey list’ of countries or jurisdictions that have made commitments to the automatic exchange of tax information.
Although Turkey has not met all the requirements, it remains on the EU’s ‘grey list’. In conclusions adopted on Tuesday, the Ecofin Council considers that “only an automatic exchange of information with all Member States would have been sufficient to meet all the requirements” set out in previous conclusions adopted in February (see EUROPE 12659/1).
The Turkish authorities are able to exchange tax information automatically with all Member States except Cyprus, with which Ankara has no diplomatic relations.
EU Commissioner for Economy Paolo Gentiloni said the Pandora Papers investigation, like previous scandals, strengthens the European Commission’s “determination” to implement its 2020 action plan. By the end of 2021, a proposal for a directive to act against shell companies will be presented, he recalled. While the EU’s ‘black list’ is “not entirely” effective, the mechanism in place does allow for pressure to be put on the targeted countries. The criteria for establishing the list “could be discussed”, and if they were to be tightened, “I would be in favour”, he stressed.
See the Ecofin Council conclusions: https://bit.ly/3Ft7btE.
See the report of the EU Council’s Code of Conduct Group on Business Taxation: https://bit.ly/3laUeML.
Renewed indignation in the European Parliament
After a debate on Wednesday, the European Parliament will adopt on Thursday the report by Aurore Lalucq (S&D, France) which makes recommendations on how to better combat harmful tax practices in the EU (see EUROPE 12762/18). Among other things, the report suggests replacing the Code of Conduct for Business Taxation with a new code called the Framework on Aggressive Tax Arrangements and Low-rates (FATAL).
“It is noted that some countries or jurisdictions are ‘too big to blacklist’. Delaware is not included, for example. This is why, through my report, I am calling for a redefinition of the criteria that define tax havens”, Ms Lalucq told EUROPE. She added: “The role of front companies is everywhere in this case. These companies should be banned; we don’t have the time or the money to regulate them, especially as they are designed to escape regulation”.
The co-chair of The Left group in the Parliament, German Martin Schirdewan, denounced the perversity of the system. “Yesterday, an EU Finance Minister was buying shares in lucrative companies in the sunny British Virgin Islands. Today, he and his colleagues decide which countries will be on the list. Surprisingly, neither the British Virgin Islands nor any other major shadow financial centre is on this list”, he said in a statement.
He was referring to the Dutch Finance Minister, Wopke Hoekstra, who was absent from the Ecofin Council meeting and was personally targeted by the Pandora Papers investigation for having invested in a company based in the British Virgin Islands.
It is a real problem that “crooks” like Wopke Hoekstra and Czech Prime Minister Andrej Babiš have “the power, on their own, to refuse the extension of the list of tax havens”, said Claude Gruffat (Greens/EFA, France). (Original version in French by Mathieu Bion with Thomas Mangin)