BRUSSELS, Belgium — During Thursday’s European Parliament debate, Members of Parliament for Europe (MEPs) questioned EU finance ministers over their removal of several countries from the tax haven blacklist in January.
Out of a list of 17 countries that was published last year December, the EU removed eight countries – Barbados, Grenada, Macao, Mongolia, Panama, South Korea, Tunisia and the United Arab Emirates – onto a “grey list” after receiving commitments from them to reform their tax policies.
On Thursday, MEP yesterday, led by German MEP Wener Langen, stated, “The Council’s decision is inappropriate… The Council should not decide based on non-binding letters and assurances, but only on facts, which states should be removed from the list and finally consider which EU member states should be added to the list.”
His views were echoed by several MEPs during the debate leading to the vote to set up a new committee to build on the work of TAXE 1 and 2 and the PANA inquiries to support the efforts of the TAXE 3.
The EU Parliament’s ‘conference of presidents’, made up of the leaders of political groups, voted to set up the 45-strong TAXE 3 committee to focus on financial crimes, tax evasion and tax avoidance, which will run for 12 months.
The distinction between tax avoidance and tax evasion has been made clear by the EU, with:
- Tax avoidance meaning the use legal instruments in order to pay as little tax as possible, for example by shifting profits to a low-tax country or deducting interest payments for loans with artificially-inflated interest rates. The EU’s anti-tax avoidance directive comes into force in January 2019; and
- Tax evasion or tax fraud meaning the use of illegal practices to avoid paying taxes, for example by not declaring profits or using various ways to avoid paying VAT.
In October 2017, the European Commission proposed legislation to tackle VAT fraud.
The nine countries remaining on the blacklist include American Samoa, Bahrain, Guam, Marshall Islands, Namibia, Palau, Saint Lucia, Samoa and Trinidad and Tobago.
This article was written by Youri Kemp, Caribbean News Now associate editor for Caribbeannewsnow.com