January 08, 2018

European report labels Ireland a tax haven, Sinn Fein votes it down

Valerie Flynn wrote in the Times, 'Sinn Fein MEPs help Ireland avoid tax haven label':
"The adopted report criticises Ireland’s role in tax evasion. In it the European parliament notes with “regret” that the latest EU tax haven blacklist focuses only on non-EU jurisdictions and omits “countries within the EU that have played a systematic role in promoting and enabling harmful tax practices”. 
The parliament noted that “at least four member states would be included on the [blacklist] if screened according to the same EU criteria”. Although not named, Ireland was one of the four member states in question. The report was adopted by a large majority of MEPs."

She added:
"However, a politically sensitive amendment explicitly naming Ireland, Luxembourg, Malta and the Netherlands as “EU tax havens” was not adopted after a tied vote of 327 MEPs in favour, 327 against and 24 abstentions."
Oxfam wrote:
"In the report, ‘Blacklist or Whitewash?’, Oxfam has applied the EU’s own criteria to the 92 countries screened by the EU, as well as to the 28 EU member states. According to the analysis, at least 35 non-EU countries should be included in the EU tax haven blacklist, and 4 EU member states: Ireland, Luxembourg, the Netherlands and Malta."
The campaign group Tax Justice Network published its own blacklist. As Juliette Garside noted in the Guardian, using the EU criteria, it singles out 41 countries, six of which are EU member states with a mixture of low tax rates, poor transparency, and generous deals on offer to multinationals. They are Cyprus, Ireland, Luxembourg, Malta, Netherlands – and the United Kingdom.

You can access all the documents relating to the PANA report here. Read the final report here, and see the amendments here and here.

The amendments noted:
"Whereas several EU Member States and overseas countries and territories (OCTs) feature in the top 100 most secretive countries, whereas Germany, Luxembourg and the United Kingdom feature in the top 15 and if UK were assessed together with its overseas territories and crown dependencies it would be at the top of such list; whereas several Member States, i.e. Netherlands, Ireland, Luxembourg and Cyprus, and European OCTs, i.e. Bermuda, Cayman Islands, Curacao, Jersey and the British Virgin Islands, feature in the top 15 corporate tax havens according to Oxfam."
And further noted:
"Notes that academic literature distinguishes between sink-OFCs - which attract and retain foreign capital - and conduit-OFCs- which are attractive intermediate destinations in the routing of international investments and enable the transfer of capital without taxation; Underlines that five countries – the Netherlands, the United Kingdom, Ireland, Singapore and Switzerland – canalize the majority of corporate offshore investment as conduit-OFCs, specialising either by geographical area or industrial sector."
On December 15 2016 the European Parliament published a report, 'Working Document on the inquiry into Money Laundering, Tax Avoidance and Tax Evasion - Committee of Inquiry to investigate alleged contraventions and maladministration in the application of Union law in relation to money laundering, tax avoidance and tax evasion'. In that they referred to parties as 'a secrecy haven, tax haven or non-cooperative jurisdiction'.
"From the Panama Papers we can abstract two steps that are key in the process of establishing a ‘meaningful’ offshore company.  
First, a company is created and registered in a secrecy haven. 
Second, this company needs to obtain a bank account, which in turn does not have to be offshore. In some cases banks have first created the bank account in an EU jurisdiction and afterwards requested legal intermediaries to create the network of offshore entities that justify money transfers being made between onshore and offshore accounts Some banks were found to be involved at both stages of the process. The creation of shell companies was facilitated by asset managers and bank accounts were provided as a result of bad customer due diligence by compliance officers.

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