EU finance ministers will today discuss the setting up of a blacklist of worldwide tax havens, after leaked documents known as the Paradise Papers revealed investments by wealthy individuals and institutions across the globe.
Reuters reported that the subject’s inclusion came after a massive data leak published by the International Consortium of Investigative Journalists and its partners, including the Times of Malta.
The data shows how the Malta Financial Services Authority chairman, Joseph Bannister, was involved in a BVI-based company which invested in a Russian mining venture.
Prof. Bannister has said he was involved in the company as a non-executive director.
EU countries have planned for months to reach an agreement on a blacklist for tax havens by the end of this year.
The leak prompted the discussion to be brought forward, EU officials said, but no final decision is expected today.
The latest revelations “put renewed emphasis on the work the European Commission is doing to fight tax avoidance”, Commission vice president Valdis Dombrovskis said yesterday.
The leak put renewed emphasis on the work the European Commission is doing to fight tax avoidance
The EU has discussed several measures to crack down on tax avoidance in the past, 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 previously discussed 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 country 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 include no jurisdictions in their national blacklists.
An EU blacklist is believed to carry more weight. Those jurisdictions included in its list could be subject to sanctions if they did not cooperate.
There are no details yet on the type of sanctions to be discussed, although being on the blacklist in itself could discourage individuals and companies from putting money in those jurisdictions.
Some EU countries remain sceptical about the blacklist and are themselves under scrutiny for unfair tax competition. Smaller States like Malta, Luxembourg and Ireland attract firms with lower corporate taxes. Reuters reports that 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.