Thursday

25th May 2017

Interview

EU commissioner: Offshore Leaks transformed tax politics

  • Semeta: 'Offshore Leaks could be identified as the most significant trigger' (Photo: ec.europa.eu)

The EU commissioner in charge of cracking down on tax cheats has urged investigative journalists to keep digging for dirt.

When EUobserver spoke to Algirdas Semeta in March 2012, the Lithuanian economist's ideas on EU tax law faced a wall of apathy from banking centres such as Austria, Luxembourg and the UK.

Dear EUobserver reader

Subscribe now for unrestricted access to EUobserver.

Sign up for 30 days' free trial, no obligation. Full subscription only 15 € / month or 150 € / year.

  1. Unlimited access on desktop and mobile
  2. All premium articles, analysis, commentary and investigations
  3. EUobserver archives

EUobserver is the only independent news media covering EU affairs in Brussels and all 28 member states.

♡ We value your support.

If you already have an account click here to login.

But just a year or so later, EU countries have given him the go-ahead for a cascade of new measures designed to claw back €1 trillion a year in lost tax revenue.

Semeta told EUobserver in an interview this week the change in EU politics is due to a "perfect storm" of events.

He mentioned the intensification of the economic crisis, the US push to end bank secrecy under its "Fatca" bill and the French scandal of Jerome Cahuzac - an ex-minister who stashed his fortune in secret accounts - as important factors.

But he said the main "trigger" was "Offshore Leaks."

"Citizens, people in member states have started paying much more attention to how their countries can collect taxes which are due under national law … If you ask me, I personally think Offshore Leaks could be identified as the most significant trigger behind these developments," he noted.

"It has created visibility of the issue and it has triggered political recognition of the amplitude of the problem. We're not talking about €100 billion or €200 billion here, but about €1 trillion," he added.

Offshore Leaks was born last year when Australian reporter Gerard Ryle obtained a hard drive containing 260 gigabytes of information on secret accounts around the world.

The cache is 160 times bigger than the US diplomatic cables published by WikiLeaks in 2010.

Over the past year, the Washington-based International Consortium of Investigative Journalists (ICIJ) has co-ordinated work on the data by more than 100 reporters from top media such as the Washington Post, the BBC, The Guardian, Le Monde and El Confidencial.

It has generated dozens of scoops.

One article prompted the resignation of Herbert Stepic - the CEO of Austria's Raiffeisen Bank International - after revelations he owned secret firms in the Caribbean.

Another one showed how Commonwealth Trust Limited - a company registered in the British Virgin Islands (BVI), a UK protectorate - set up shell firms to launder Russian mafia money.

ICIJ member Duncan Campbell said at a seminar in Brussels in May the stories out so far are just "the tip of the iceberg."

The ICIJ is now turning its attention to people resident in Belgium and Luxembourg - the homes of the EU institutions and their officials.

For Semeta, Offshore Leaks is different to WikiLeaks because it attacks criminal activity instead of diplomatic confidentiality.

He told EUobserver that tax transparency is more important than data privacy.

"What these investigative journalists are doing is exposing people who are breaking the law in their own countries," he said.

Looking back to a meeting of EU finance ministers on 14 May and the EU summit on 22 May, he said EU countries have crossed the rubicon on bank secrecy.

They instructed Semeta to launch talks with European tax havens Andorra, Liechtenstein, Monaco, San Marino and Switzerland on "automatic exchange" of bank data.

They pledged to close loopholes in the Union's "savings tax directive" by the end of this year.

They gave the green light to launch a new EU law against VAT fraud in June.

They instructed the commission to press ahead with on new rules against corporate tax avoidance - the perfectly legal, but controversial, practice of big companies such as Apple, Google or Starbucks, which wiggle out of paying tax in countries where they generate much of their income.

They also urged Semeta to work with the OECD, a Paris-based economic club, and with finance ministers from the G20 group of leading world economies to export the EU's measures beyond its borders.

The commissioner noted that Austria and Luxembourg have bound themselves to fall in line despite previous reluctance.

"There is a political agreement at the highest level that the amended savings tax directive has to be adopted by the end of the year," he said.

"There is common political will to adopt the directive as it stands," he added.

He noted the UK still has homework on overseas protectorates, however.

Britain shares bank information with its semi-independent territories in the Caribbean and beyond. But Semeta said it must make sure the amended EU tax directive will also apply to places like the BVI.

"The objective is to close loopholes in exchange of information also with these islands," he noted.

"We need to create a situation so that automatic exchange of information can take place between any EU member state and the UK protectorates," he added.

Criminal tax evasion aside, Semeta questioned the ethics of corporate tax avoidance.

Google is known for its motto: "Don't be evil."

But Semeta said: "I always link this issue [tax avoidance] with corporate social responsibility - a company cannot be treated as being socially responsible if it creates all these structures to avoid paying taxes."

Ireland on the defensive in Apple tax row

Ireland has come under fire for its low-tax regime amid US revelations that Apple and other large corporations are using EU-based subsidiaries to avoid paying taxes.

Opinion

Tax wars: EU playing catch-up with US

The EU has promised to create the world's leading tax transparency regime. But it is playing catch-up with Fatca, the equivalent US legislation.

News in Brief

  1. Pressure grows on climate impact of EU timber harvesting
  2. US goes after Fiat Chrysler over emissions cheat
  3. Munich police break up Europe-wide burglar clan
  4. Report: VW threatened with €19.7 billion French fine
  5. Turkey begins mass trial of suspected coup leaders
  6. Merkel's CDU consolidates lead in polls
  7. France to host Russian president
  8. Switzerland votes against nuclear power

Stakeholders' Highlights

  1. UNICEFChild Alert on Myanmar: Fruits of Rapid Development yet to Reach Remote Regions
  2. Nordic Council of MinistersBecome an Explorer - 'Traces of Nordic' Seeking Storytellers Around the World
  3. Malta EU 2017Closer Cooperation and Reinforced Solidarity to Ensure Security of Gas Supply
  4. European Healthy Lifestyle AllianceHigh-Intensity Interval Training Is Therapeutic Option for Type 2 Diabetes
  5. Dialogue Platform"The West Must Help Turkey Return to a Democratic Path" a Call by Fethullah Gulen
  6. ILGA-EuropeRainbow Europe 2017 Is Live - Which Countries Are Leading on LGBTI Equality?
  7. Centre Maurits CoppietersWhen You Invest in a Refugee Woman You Help the Whole Community
  8. Eurogroup for AnimalsECJ Ruling: Member States Given No Say on Wildlife Protection In Trade
  9. European Heart NetworkCall for Urgent Adoption of EU-Wide Nutrient Profiles for Nutrition & Health Claims
  10. Counter BalanceInvestment Plan for Europe More Climate Friendly but European Parliament Shows Little Ambition
  11. Mission of China to the EUPresident Xi: China's Belt and Road Initiative Benefits People Around the World
  12. Malta EU 2017EU Strengthens Control of the Acquisition and Possession of Firearms

Latest News

  1. Openness over Brexit is 'political play', says EU ombudsman
  2. Le Pen's EU group in fresh spending scandal
  3. New EU right to data portability to cause headaches
  4. Cyber threats are inevitable, paralyzing impact is not
  5. Transparency complaints keep EU Ombudsman busy
  6. EU sets out criteria for relocating UK agencies
  7. EU states back bill against online hate speech
  8. Dutch coalition talks collapse again

Stakeholders' Highlights

  1. International Partnership for Human RightsThe Cost of Speaking Out: Human Rights Violations Committed in Belarus
  2. ACCABanishing Bias? Audit, Objectivity and the Value of Professional Scepticism
  3. Nordic Council of MinistersNew Oslo Climate Declaration Focuses on Rising Temperatures in the Arctic
  4. European Healthy Lifestyle AllianceAbdominal Obesity: A Causal Risk Factor for Cardiometabolic Diseases
  5. EU Green Week 2017Discuss EU Environmental Policies With Industry Experts and Thought Leaders
  6. GEN Summit 2017Join the World's Leading Media Summit for Thought-Provoking Talks and Experiences
  7. International Partnership for Human RightsTogether for Human Rights: A Year in Review
  8. Malta EU 2017EU All Set for Free Roaming Starting 15 June
  9. Nordic Council of MinistersRefugee Unemployment Biggest Drain on Public Purse, Says New Nordic Studies
  10. Dialogue Platform17,000 Women, 515 Babies in Turkish Prisons, a Report Reveals
  11. European Healthy Lifestyle AllianceCharlotte Hornets' Nicolas Batum Tells Kids to "Eat Well, Drink Well, Move!"
  12. ECR GroupSyed Kamall: We Need a New, More Honest Relationship With Turkey