European Union states will on Tuesday discuss plans for a tax havens` blacklist, officials said, in a bid to tackle offshore tax avoidance after leaked documents revealed investments by wealthy individuals and institutions around the globe.
The subject`s inclusion on the monthly meeting`s agenda of EU finance ministers came after weekend media reports citing the so-called "Paradise Papers", a trove of financial documents leaked mostly from Appleby, a prominent offshore law firm.
The documents were obtained by Germany`s Sueddeutsche Zeitung newspaper and shared with the International Consortium of Investigative Journalists (ICIJ) and some media outlets. Reuters has not independently verified them. Appleby was not immediately available for comment.
The latest revelations "put renewed emphasis on the work the European Commission is doing to fight tax avoidance", the vice president of the EU`s executive arm, Valdis Dombrovskis, told reporters on Monday.
EU countries had planned for months to reach an agreement on a blacklist for tax havens by the end of this year. The new revelations prompted the discussion to be brought forward, EU officials said, but no final decision was expected on Tuesday.
The EU has discussed several measures to crack down on tax avoidance, including in the wake of the "Panama Papers", a release by the ICIJ last year which chronicled a shadowy world of offshore holdings and hidden wealth.
Measures proposed by the European Commission include an EU-wide list of tax havens meant to discourage the rerouting of profits made in the EU to tax-free or low-tax countries, like Panama or Bermuda.
At the moment, each EU state has its own list of jurisdictions that are seen as less cooperative on tax matters. Criteria to define a tax haven vary greatly among EU states and some of them omit any jurisdictions in their national blacklists.ONE-COUNTRY LIST?
An EU-wide blacklist is believed to carry more weight. Jurisdictions included in the list could be subject to sanctions if they did not cooperate.
"It`s time that we agree and publish a blacklist on tax havens," EU tax commissioner Pierre Moscovici told reporters, calling for a "credible" list and "adequate sanctions" when serious breaches are unveiled.
There are no details yet of the type of sanctions that could be imposed, although being on the blacklist in itself could discourage individuals and companies from putting money in those jurisdictions.
Moscovici added that the EU blacklist should be more ambitious than the existing list of the Organisation for Economic Cooperation and Development (OECD), a global group of mostly rich nations that has so far been leading the fight against tax avoidance.
The OECD list of non-cooperative jurisdictions on tax transparency includes to date only Trinidad and Tobago.
Some EU countries remain sceptical about the blacklist and are themselves under scrutiny for unfair tax competition.
Smaller EU states, like Luxembourg, Malta and Ireland, attract firms with lower corporate taxes. Some have been sanctioned for deals with multinationals that slashed their tax bills, reducing revenues in other EU states.
To win over their resistance, the proposed EU blacklist would apply only to non-EU countries. Also, states which charge no corporate taxes will not be automatically considered tax havens, under a preliminary deal reached by EU finance ministers last year.
On tax matters the EU can take decisions only with the unanimous backing of its 28 member states, unless extraordinary procedures are launched - an option never tested so far.
To reduce the appeal of tax havens, Brussels has also proposed the setting up of public registries that would show the real owners of companies, which are often hidden by frontmen in shell firms in offshore jurisdictions.
It has also proposed compulsory reporting by large multinational firms of profits made and taxes paid in each state where they operate, in a bid to show how much of their revenues are booked in low-tax countries.
EU states have long been discussing both proposals, but no deal has been reached yet. "EU governments such as Germany have been standing against the rising tide of financial transparency," said Carl Dolan, director of Transparency International EU.
(This article has not been edited by Zeebiz editorial team and is auto-generated from an agency feed.)