The European Union is preparing a black list of tax havens that help wealthy ‘vampires’ avoid paying taxes.
EU finance chief Pierre Moscovici says rich tax avoiders are not breaking the law by sending their money offshore to profit from schemes like those detailed in the recent Paradise Papers leak.
But the influential Eurocrat says banking and tax laws should be changed to stop people taking advantage of loopholes.
As a result, he is stepping up three policies aimed at blocking tax avoidance:
- A blacklist of tax havens which is expected to highlight at least 50 ‘uncooperative’ countries
- New laws to stop banks, tax advisers and lawyers from setting up tax avoidance schemes
- Imposing country-by-country reporting for companies to ensure they pay tax on profits in the place where goods and services are sold
The EU wants to see all the measures implemented within a year, and the black list to be published by the end of 2017.
Prime suspects for listing
The British government will attend the blacklist meeting on December 5, but is worried several overseas territories, such as the British Virgin Islands, Cayman Islands and Bermuda, will top the table of tax havens.
The Isle of Man and Channel Islands Jersey and Guernsey are also under scrutiny.
EU state Luxembourg and European Economic Area member Liechtenstein, which has close affiliations with the EU, are both leading tax havens that could be considered for inclusion on the list.
Malta, another EU member, also pays a prominent role in Paradise Papers activities.
“Many of these aggressive tax planning optimisation schemes seem to be completely legal,” said Moscovici.
Secrecy and impunity
“We have to respond by establishing a new legal framework. If this is legal, as many people claim, then we must change the law.
“Transparency will stop the culture of secrecy and feeling of impunity people who carry out tax avoidance seem to have.
“They’re a sort of vampire who do not seem to fear anything but light and it is up to us to generate that light.”
The Paradise Papers are a library of 13.4 million confidential legal files leaked to the media detailing the tax avoidance activities of Britain’s Royal family, celebrities and millionaires.