The permanent representatives of the EU member states are expected to announce the updated EU list of tax havens tomorrow (17 February). Turkey will receive a further deferral until the end of June 2021 to implement measures for greater tax transparency. The country has long been criticised for not implementing the automatic exchange of tax-related information with EU member states and for not sharing tax information with Germany, Austria, France, Belgium and the Netherlands. These European countries are home to the largest number of Turks in Europe, approximately 5 to 7 million. Turkey also does not share tax information with Cyprus, with which it also has no diplomatic relations. Turkey had until 31 December 2020 to implement the automatic exchange of information on tax matters. It has not complied with this deadline.
MEP Sven Giegold, financial and economic policy spokesperson of the Greens/EFA group commented:
“Turkey belongs on the European list of tax havens. The deferral for Turkey is an invitation to evade taxes. With every day that Turkey does not have to transmit tax data, the tax damage for Europe becomes greater. The decision is weakening the already toothless EU tax haven list by giving Turkey this gratuitous extension.
The inconsistent approach of the European governments makes the fight against tax havens less credible and therefore unsuccessful. If the EU sets deadlines for Turkey, it must insist that they be met. The end of the deadline coincided with the end of the German Council Presidency. When it became clear that Turkey would not implement the EU’s demands, Germany should have reacted.
The European Parliament has long criticised the lack of transparency with which the EU list of tax havens is decided. The price for this lack of transparency is considerable tax damage in Europe, for which the general public has to pay.
Considering the longstanding conflict between Cyprus and Turkey, the EU’s overly hesitant approach is regrettable.”
Here is the European Parliament’s resolution on the reform of the tax havens list: https://sven-giegold.de/wp-content/uploads/2021/01/Beschlusstext-EN_EU-Liste-der-Steueroasen_2021-01-21.pdf
The EU list of tax havens was introduced in 2017 with the aim of putting an end to tax havens around the world and imposing sanctions on them to stop the loss of tax revenues. Currently, it covers only about 2 per cent of corporate tax avoidance worldwide. Most recently, the European Parliament had called for stricter criteria for the list as well as a consistent and transparent listing process.
The EU list of tax havens is the result of a review and dialogue process of the Code of Conduct Group on Business Taxation in the European Council with third countries. In this process, EU member states assess third countries according to criteria on tax transparency, fair taxation, implementation of OECD BEPS measures and examination of the economic substance of tax arrangements for zero-tax countries. Unfortunately, these criteria are not always applied consistently. Member states, such as Malta, which do not meet the criteria for third countries are unfortunately not sanctioned. The criteria also need to be tightened in order for them to cover all tax havens. Although the Cayman Islands have a corporate tax rate of 0%, they were removed from the list again in October 2020. To prevent this from happening in the future, the European Parliament is calling for a minimum effective corporate tax rate as a core criterion, around the average statutory corporate tax rate in the EU (21.7% in 2019).
The Cayman Islands are responsible for 16.5% of tax losses worldwide. They are part of the UK’s spider web of tax havens, responsible for 37.4% of all tax losses globally. After Brexit, the criteria must be applied consistently to the UK and its overseas territories. Furthermore, the Parliament demands that the criteria also be used to clearly identify tax havens in the EU.
A detailed elaboration of the demands of the European Parliament can be found here: https://sven-giegold.de/en/landmark-decision-eu-list-tax-havens/
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