EU blacklist of tax havens to be completed by December

The publication of the Paradise Papers will give an important impetus to EU plans to blacklist and act against states which persist in acting as tax havens, EU Commission vice-president Valdis Dombrovskis said on Tuesday.

Speaking at the conclusion of the meeting of EU finance ministers in Brussels, he said ministers had expressed confidence that the list could be completed and agreed by December. He hoped that the meeting would also give teeth to the list by agreeing "countermeasures".

At the meeting, ministers were told that letters have gone out to 92 states with which the EU has economic relations. Their responses between now and December to assurances sought would form the basis of any blacklist. Around 22 of the states have already been “cleared”.

Sources say that there was no discussion of the specifics of any countermeasures, which could range from "naming and shaming" to financial sanctions, but French minister Bruno Le Maire called publicly for the cutting-off of international funding from the World Bank and international institutions to states which continued to shelter and provide secrecy to tax evaders.

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More ambitious

Economic and financial affairs commissioner Pierre Moscovici told reporters the EU blacklist should be more ambitious than the existing list of the Organisation for Economic Cooperation and Development (OECD), a global group of mostly rich nations that has so far been leading the fight against tax avoidance.

Ireland has not taken a view on what sanctions should be applied.

Meanwhile, progress on the EU’s directive covering VAT on e-commerce stumbled.

Germany blocked the directive and two accompanying regulations, which required unanimity to pass, after it raised objections to key parts of the cross-border package including the extension of the "one-stop shop" and elimination of VAT exemption on small parcel imports.

The commission and Estonian presidency, however, expressed confidence that the measures would pass in December after further discussions. Moscovici said the German objections were “political” rather than technical, and made clear he did not see the text undergoing significant change.

Unfair burden

The directive would impose an unfair burden on German tax authorities which would be required to oversee the tax collection in 27 EU member states, acting German finance minister Peter Altmaier had said.

Courier companies such as FedEx and United Parcel Service (UPS) as well as postal companies such as Deutsche Post have been lobbying intensely against the removal of the VAT exemption on small parcels which they believed would enormously raise their costs.

The EU electronic commerce industry was also opposed because of provisions that will make online marketplaces such as eBay, Amazon and others liable for collecting VAT on purchases by EU citizens from non-EU online merchants.

Luxembourg finance minister Pierre Gramegna insisted more information about implementing rules about making online platforms liable for collecting VAT was necessary.

The European Commission proposed the legislation in December 2016 to simplify rules for online merchants and to reduce fraud that it estimates costs governments €5 billion a year.