EU takes first step on tax haven blacklist
By Jean Comte
EU finance ministers agreed on Tuesday (8 November) on criteria to single out non EU tax havens but will publish a black list only next year.
"It is the time first we agreed on a common approach at EU level, this is a welcome step," said EU commissioner Valdis Dombrovskis.
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"It's about incentive, not punishment," insisted Slovak finance minister Peter Kazimir, who chaired the meeting.
To avoid being on the future EU black list, countries and jurisdictions will have to comply with international transparency standards, adopt measures for "fair taxation", and implement an OECD global plan against tax avoidance.
The discussion was politically sensitive for several member states and ministers needed a long time before being able to agree unanimously on the list of criteria.
The United Kingdom, Ireland, and the Baltic countries were among the more reluctant and refused that "a nominal corporate tax rate equal to zero or almost zero" was used as criteria for the blacklist, according to sources.
Mention of minimal rate was "a veto area for some countries," Kazimir noted.
The UK, in particular, was in a very delicate situation, as the final list could include several Crown dependencies - Jersey, Guernsey, and the Isle of Man, according to a preliminary research done by the European Commission.
Ministers also took out from the draft document a part that referred to countries likely to end up on the final blacklist - Jersey and Guernsey, but also the Bahamas, Cayman Islands, Liechtenstein and Monaco.
Another contentious issue was whether a country has to respect all transparency criteria or only two out of three to avoid being blacklisted.
The final compromise says that respecting only two of them is enough until July 2019, but that all of them should be followed afterwards.
The final blacklist will now be elaborated, through a process that raises some questions about the transparency of the fight for more tax transparency.
The work will be done by the so-called Code of Conduct group which has already worked on criteria, with the European Commission confined to “preparatory work”. The group is a technical body within the Council of the EU, specialised in business taxation.
It will not communicate details of its further work on the EU blacklist, except for the contacts it will have in January with countries under scrutiny to check whether they are ready to amend their tax structure to avoid being listed.
"It is not normal that this process happens only in secret meetings, and not through an open process," said Tove Maria Ryding, tax justice coordinator at the European Network on Debt and Development (Eurodad).
"That will weaken considerably the final list," she said.
"It is not acceptable that the Council insists on its space of secrecy," said German Green MEP Sven Giegold.
The fact that negotiations take place "without public accountability is against the spirit of European democracy," he said.