As the Ecofin Council prepares to revise the European list of uncooperative tax jurisdictions (see EUROPE 13120/3), Oxfam International is calling for stricter criteria for the list. “There is a structural weakness to the list”, said Chiara Putaturo, European tax policy advisor for Oxfam, in an interview with EUROPE on Monday 13 February.
“In 2020, the European Commission asked the (EU Council’s) Code of Conduct Group, which draws up the list, to update the criteria, but this has not yet happened”, she deplored (see EUROPE 12528/2).
Regarding the criterion of harmful tax regimes, Ms Putaturo advocated for adding indicators relating to the real economy, with physical activity criteria, such as the number of employees in relation to profits, the number of offices or machines in companies. “These criteria can be used as a red flag”, she explained.
Jurisdictions with a zero tax rate, such as Bermuda, the Cayman Islands, the Isle of Man, Jersey, Guernsey and the United Arab Emirates, should also automatically be included in the list.
Another important indicator, according to Ms Putaturo, is the economy of passive flows. “If you look at the flow of dividends, royalties, you can see that in some countries these values are high compared to GDP”, she said. Many flows are attracted because of tax regimes, which act as intermediaries to tax havens. She mentioned the cases of the Netherlands, Luxembourg, Malta, Cyprus, Ireland and Hungary to some extent, denouncing “an unbalanced treatment between third countries and EU countries”.
Ms Putaturo regretted that beneficial ownership is not yet taken into account, as some EU countries do not comply with it.
As for Country-by-Country Reporting (CbCR), she found that “the treatment was disproportionate”. “Some of the criteria are unfair, and unbalanced for countries with weaker economies”, according to the Oxfam advisor. Countries such as Vietnam, Botswana and Dominica, which are on the EU’s ‘grey’ list of jurisdictions that have made commitments on good tax governance, do not have the capacity to implement them, especially as their failure to do so is not harmful, according to Ms Putaturo.
She also raised the issue of transparency in the process of drawing up the list: “The Code of Conduct group made an effort last year, but the exchanges with countries and the meetings are not public”, she said, citing “a lot of political interference”.
Finally, according to Ms Putaturo, there is a direct link between tax havens and corporate windfall profits. “While these are partly caused by speculation, they are possible because companies can report their profits to tax havens”, she concluded. (Original version in French by Anne Damiani)