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News > U.S.

EU Shields Corrupt Tax Havens Fueling Global Inequality: Report

  • Oxfam activists protest 'sunbathing in a tax haven' in Brussels, Belgium, Dec. 5, 2017.

    Oxfam activists protest 'sunbathing in a tax haven' in Brussels, Belgium, Dec. 5, 2017. | Photo: EFE

Published 7 March 2019

The world's most aggressive tax havens are not called out as 'bad guys' for economic or political reasons.

Ireland, Luxemburg, the Netherlands, Malta and Cyprus would be considered tax havens if the European Union (EU) applied the same criteria on its members states as it does on its blacklist, as reported by and international NGO, Oxfam which pulished an investigation into how the EU determines what is a tax haven.

European Union Adds Bahamas, Saint Kitts, Virgin Islands to Tax Haven Blacklist

"The EU imposes its rules on the outside world, but within the EU there are many harmful tax practices that are legitimized," Johan Langeroc, the author of Oxfam's report, told to El Periodico, adding that Ireland, Luxembourg, the Netherlands, Malta and Cyprus are "large tax havens" even if they do not appear on the EU lists.

Given that tax havens deprive governments of billions of dollars in taxes each year, thereby fueling inequality and poverty, the EU blacklisting process was launched in December 2017 as an attempt to stop them. It was a response to information published by LuxLeaks, the Panama Papers and the Paradise Papers, all of which made shocking revelations into the world of corporate tax avoidance.

The EU uses two lists to document tax havens — there is a “black list,” which currently includes only five small island states: U.S. Samoa, Guam, Samoa, Trinidad and Tobago and the U.S. Virgin Islands. The other is a “grey list,” which encompasses 63 countries whose governments have committed to reforming their practices.

The EU's final lists will be reviewed at the next meeting of the EU Economic and Financial Affairs Council (Ecofin). From its own research, however, Oxfam fears that the EU blacklist will not include several well-known tax havens due to powerful political influence or economic convenience.

"Drawing up a tax haven blacklist was a brave bet to fight tax evasion and avoidance, but the EU seems to have lost its initial impetus," Susana Ruiz, head of Tax Justice at Oxfam Intermon, told Publico and commented that "the European governments seem willing to give 'carte blanche' to some of the world's most aggressive tax havens, calling into question the credibility of the whole process."

Among those territories that may not appear on the EU final tax haven lists are: Panama, Bermuda, the British Virgin Islands, the Cayman Islands, Guernsey, Hong Kong, the Isle of Man, Jersey, Switzerland and the United States.

Oxfam asked the EU to strengthen the blacklist criteria through measures such as the adoption of a broader definition of what a harmful tax practice is, and the application of a solid evaluation process, based on objective principles and free from any political interference.

"Big companies' tax evasion and avoidance caused France, Spain, Italy and Germany to stop collecting about 35 billion euros in taxes only in 2015," Publico reported and added that "if these countries could invest this amount in their public health systems, they could reduce direct spending on families' health by up to 28.3%."

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