Let’s not overreact to Panama Papers, many EU finmins warn

Tuesday, 26 April 2016 00:48 - - {{hitsCtrl.values.hits}}

Reuters: A European Commission plan to publicly reveal tax and financial data of large companies raised concerns among many European Union finance ministers who on Saturday advised caution after the Panama Paper leaks.

Under pressure after the revelations about offshore firms hiding wealth, the EU executive proposed on 12 April a plan to increase tax transparency of multinational companies, including public disclosure of their activities in tax havens.

Companies have warned of reputation risks, as some data may be misinterpreted if made publicly available. Non-EU firms could also acquire valuable information on their EU competitors, damaging their competitiveness, trade associations said.

German Finance Minister Wolfgang Schaeuble questioned the effectiveness of the Commission’s plan at the end of a two-day finance ministers meeting in Amsterdam and indicated German federal states opposed public disclosure of companies’ tax data.

“Many people and entities are more willing to share information when they do not have to fear the effect of a public pillory,” he said, backing disclosure only to tax authorities.

“We should not overreact,” his Maltese counterpart Edward Scicluna said, warning against the competitive risks for EU companies if overly strict transparency regulations were adopted.

“We would prefer that as a first step, (corporate tax data) should be available to tax authorities, not to the public.”

Belgian Finance Minister Johan Van Overtveldt said the ministers “have to be careful about privacy rights.”

Taking note of the “different views” among ministers, Dutch Finance Minister Jeroen Dijsselbloem said that the topic will be formally addressed at a new meeting during his country’s presidency of the EU in this first half of the year.

He conceded that talks would have to continue beyond the summer to reach a possible compromise on the subject.

The EU draft rules would require firms with an annual turnover above 750 million euros to publicly disclose their tax data in all EU countries where they operate.

With a last-minute tweak, the Commission extended this new disclosure requirement to corporations’ activities in so-called tax havens, jurisdictions that facilitate companies and individuals to hide their taxable income.

The European Commission, the EU’s executive arm, had initially proposed in January that companies’ detailed tax data should be available to tax administrations in each EU country, but not to the wider public.

Anti-corruption campaigners have urged the EU do to more than that proposed so far, extending public disclosures to all countries and to more companies.

EU states back plans for common tax havens’ black list

Reuters: European Union states agreed on Friday to work towards setting up a joint blacklist of tax havens by the end of the summer in the wake of the Panama Papers leaks.

Following the leaks, EU tax commissioner Pierre Moscovici had urged EU states to find a compromise and set up a joint list with common sanctions against tax havens to combat tax evasion.

Currently the 28 EU states have broadly different national lists of so-called non-cooperative jurisdictions on tax matters and are free to decide whether to impose restrictive measures.

“There is a unanimous support to set up a common EU black list of tax havens by the end of the summer,” Moscovici told reporters at the end of a meeting of EU finance ministers in Amsterdam.

EU finance ministers backed this plan, Dutch Finance Minister Jeroen Dijsselbloem told a news conference after an informal ministerial meeting.

But negotiations are expected to be complex and the number of jurisdictions to be included in the list remains unclear. Plans to have a single EU list are not new but have been blocked in the past by national conflicting interests.

Ministers also agreed to automatically exchange information on the beneficial owners of companies, another move that may increase transparency and reduce tax evasion.

The European Commission will also present in the coming months new legislative proposals to crack down on banks and tax advisers who help their clients to hide money offshore.

Rules to increase transparency on beneficial owners of companies and trusts are also in the making.