Oxfam fears a whitewash is ahead over EU ‘tax blacklist’
GUERNSEY looks set to get a clean bill of health in a European Union review of the bloc’s ‘tax haven blacklist’, according to Oxfam.
New research by the charity has also concluded that Jersey and the Isle of Man are likely to be de-listed entirely in recognition of tax reforms introduced by these jurisdictions since the original list was published.
Bermuda, the British Virgin Islands, the Cayman Islands, the Bahamas, Hong Kong and Panama are also similarly expected to come off the EU’s radar.
While never on the formal list the island had to commit to certain reforms around requiring businesses to prove economic substance, when it was first published.
European finance ministers are expected this week to prepare to publish their review of those at a Brussels meeting. However, Oxfam claimed that the EU exercise could amount to a ‘whitewash’ in not going far enough in tackling harmful tax practices.
The charity described a requirement for companies to hold meetings and employ a small number of staff in a jurisdiction as a small price for a large company to pay in order to continue enjoying zero tax rates and shifting profits.
In addition, weak assessment criteria set by the EU meant that countries which allow profit shifting through some harmful tax practices, and low or zero corporate tax rates, were slipping through the net.
‘The EU should blacklist countries with zero tax rates for companies, to make it clear that shifting profits to these tax havens is unacceptable,’ said Rebecca Gowland, the head of Oxfam’s inequality campaign.
‘A strong deterrent is needed to stop countries competing in a race to the bottom on corporate tax, which deprives other countries of revenue that could help fight poverty.’
Oxfam’s report on the blacklist also highlighted that Cyprus, Ireland, Luxembourg, Malta and the Netherlands would appear on the blacklist if EU member states were not given an automatic exemption.
Political interference in the screening process also meant that tax havens such as Switzerland and the United States were unlikely to feature on the blacklist. Oxfam said that both should on the basis on their tax practices.
‘The UK can lead the way by pushing its territories and dependencies to come clean about what happens on their shores,’ added the head of Oxfam’s inequality campaign.
The charity also claimed that a key opportunity for the UK government to secure meaningful reform on tax transparency was missed last week. British ministers pulled the Financial Services (Implementation of Legislation) Bill from debate in parliament after a group of MPs sought to force through amendments requiring the Crown Dependencies to introduce public registers of beneficial ownership by the end of 2020.
