Europaudvalget 2017-18
EUU Alm.del Bilag 182
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OXFAM BRIEFING NOTE
NOVEMBER 2017
Oxfam tax havens stunt outside the EU offices in Brussels. Photo: Tineke D'haese/Oxfam
BLACKLIST OR WHITEWASH?
What a real EU blacklist of tax havens should look like
EMBARGOED UNTIL
23:01
HRS CET TUESDAY 27 NOVEMBER 2017
Tax havens deprive countries of hundreds of billions of dollars, fuelling
inequality and poverty. The EU will soon release a blacklist of tax havens
operating outside the EU, and issue penalties for those appearing on it.
However, power politics means that several significant tax havens could
be missing from the list. This report shows what a robust blacklist of tax
havens would look like if the EU were to objectively apply its own criteria
and not bow to political pressure. It also reveals four EU countries that
would be blacklisted if the EU were to apply its own criteria to member
states.
While the EU’s criteria are not perfect and will not capture all tax
havens, they are a step in the right direction. An objective blacklist,
combined with powerful countermeasures, could go a long way towards
ending the era of tax havens.
www.oxfam.org
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SUMMARY
The Paradise Papers
1
revelations have once again put tax havens in the
spotlight. The global network of secrecy that helps the super-rich and
multinational corporations to avoid the tax they owe is a global scandal. Tax
havens drive inequality. They allow the rich to avoid tax, and are helping create
extremes of wealth that see eight men owning the same as the bottom 3.6
billion people.
2
They deny governments hundreds of billions in tax revenue
–
revenue that could be spent on live-saving healthcare or education for all.
3
All over the world, citizens are again demanding that something be done to end
tax havens once and for all.
The EU blacklist: a step forward?
One concrete and powerful way to clamp down on tax havens is to establish an
objective list of what they are, and to ensure that those on the list are subject to
punitive sanctions. Given this, Oxfam has formerly welcomed and supported
4
the
EU’s move to establish a joint-EU
blacklist.
To work, a blacklist must be based on transparent and objective criteria and be
free from any vested interests or political interference. If not, a blacklist can
rapidly lose credibility. As powerful tax havens ensure that they are not on the
list, it rapidly becomes a whitewash instead. This has been the case with the
OECD list created for the G20, which ended up with just one country on it,
Trinidad and Tobago.
5
Sadly, the process of creating an EU tax havens list has been handicapped by
the same problems. It has been opaque. Its criteria should be significantly
strengthened. The EU should do far more to target tax havens that have
corporate tax rates that are zero or close to zero. It could also do a lot more to
target the multiple loopholes that allow corporations to avoid paying the tax they
owe.
6
Nevertheless, if the EU at least applies the criteria it has already managed to
agree on in an objective way, this could be a meaningful step towards ending
tax havens. The EU plans to publish its first list on 5 December 2017. In
anticipation of this, Oxfam has identified which countries should be on this list if
it is to be objective, effective and credible.
‘Recent
headlines
about Google,
Starbucks, or Ikea
have underlined
that an international
tax system needs to
work for everybody.
[…] We need
a tax
system in which
ordinary citizens
are convinced that
multinational
companies and
wealthy individuals
are contributing a
fair share to the
public purse, to the
common good.’
Christine Lagarde, IMF
Managing Director; Abu
Dhabi, 22 February 2016
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Which countries should be on the EU blacklist?
Oxfam has conducted a detailed assessment showing which countries should
appear on the EU blacklist of tax havens if the EU were to objectively apply its
own criteria, and not bow to any political pressure.
Based on a conservative estimate of scoring countries and territories on the EU
criteria, Oxfam assesses that at least the following 35 countries should be
expected to feature on the EU blacklist:
Albania
Anguilla
Antigua and Barbuda
Aruba
Bahamas
Bahrain
Bermuda
Bosnia and Herzegovina
British Virgin Islands*
Cook Islands
Cayman Islands
Curacao
Faroe Islands
Former Yugoslav
Republic of Macedonia
Gibraltar
Greenland
Guam
Hong Kong
Jersey
Marshall Islands
Mauritius*
Montenegro
Nauru
New Caledonia
Niue
Oman
Palau
Serbia
Singapore
Switzerland
Taiwan
Trinidad and Tobago
United Arab Emirates
US Virgin Islands
Vanuatu
*Indicate the jurisdiction has been identified as a conduit tax haven
From the beginning, the EU list aimed to look only at countries outside the EU.
This step strongly harms the credibility of the process, as EU member states
such as Ireland, Luxembourg and the Netherlands are some of the most
powerful tax havens in the world,
7
enabling some of the biggest corporations in
the world to pay minimal tax. That this is the case has been confirmed by the
European Commission itself as a result of a series of landmark rulings against
Apple, Amazon and Starbucks.
8
Some of the same countries have recently
appeared again in the new wave of tax revelations, the Paradise Papers.
9
Oxfam believes that the EU should put its own house in order when it comes to
fighting tax evasion and tax avoidance and that EU countries should not be left
off the list. Therefore, Oxfam also assessed the 28 EU member states and
discovered that at least four of them should feature on the EU blacklist if
screened against the EU’s own
criteria:
Ireland *
Luxembourg
Malta
Netherlands
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Methodology
The EU’s
listing process
uses three sets of criteria to identify tax havens:
transparency, fair taxation, and participation in international fora on tax.
Importantly, the EU has acknowledged the danger of (extremely) low corporate
tax rates and included assessment on this under the ‘fair taxation’ criteria.
10
To assess whether countries were transparent according to the first EU
criterion, Oxfam looked at latest available documents from the OECD regarding
exchange of information.
11
For the second criterion, fair taxation, Oxfam
considered the existence of potentially harmful tax regimes as referred to by the
OECD
12
and the existence of 0% corporate income tax rates. Oxfam then used
comparable data (eight economic sub-indicators) from international public
databases (Eurostat,
13
UN Stats,
14
World Bank and IMF
15
) to assess whether a
country’s profits
were significantly out of balance with real economic activity
within the country. Finally, Oxfam considered any commitment to minimum
standards on base erosion and profit shifting (BEPS).
16
Ending tax havens to reduce worldwide inequality
Tax scandals that have recently hit the headlines in Europe have not only
harmed European countries. Corporate tax revenue losses are estimated to cost
developing countries $100bn a year.
17
Just one-third of this amount would be
enough to pay for the essential healthcare that could prevent the needless
deaths of eight million people.
18
Corporate tax continues to be relatively more
important to developing countries’
government revenues, accounting for 16%
of tax receipts compared with a little more than 8% for high-income
countries.
19
Governments have a responsibility to protect and improve corporate tax
collection. Limiting tax tricks can simultaneously benefit growth and reduce
income inequality. Fairer revenue redistribution tied to education, especially for
girls, can reduce gender inequality and boost women’s empowerment.
20
While
tax havens are ripping off developing countries, they are doing little to benefit
local people. The Panama Papers
21
put the Central American republic of
Panama
22
under the spotlight, but the vast majority of the population has nothing
to do with tax avoidance schemes. In fact, in 2015 almost 32% of Panamanians
were still living below the poverty line.
23
Tax havens and the tax race-to-the-bottom are not benefitting anybody but a
small elite composed of rich individuals and large multinationals. It is time to end
them.
Political leaders are faced with a choice between ending the harmful impact of
tax havens on both the EU and developing countries
–
or whitewashing tax
havens and perpetuating the corporate tax race-to-the-bottom. This should not
present a dilemma. Oxfam urges the EU and EU governments to:
•
Adopt a clear and ambitious blacklist of tax havens, based on objective
criteria and free from political interference. The EU should work towards a
gradual improvement of its own criteria to cover all harmful tax practices;
•
Introduce transparency regarding the listing process by disclosing the exact
methodology used for analysing countries, as well as a summary of third
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country interactions with the Code of Conduct Group during the listing
process. Greater transparency will ensure that EU member states’ decisions
are not influenced by diplomatic or economic pressure;
•
Adopt strong common and coordinated defensive measures against
blacklisted countries to limit base erosion and profit shifting. As a top priority,
countries should at least implement stronger controlled foreign company
(CFC) rules, enabling countries to tax profit that has been artificially parked in
tax havens;
•
Take appropriate measures against EU tax havens. This should include
adopting new legislation on harmful tax practices, a minimum effective tax
rate for risky types of payments such as royalties and interests
24
and
adopting common tax rules such as those proposed in Common
Consolidated Corporate Tax Base C(C)CTB;
25
•
Provide support and direction to jurisdictions which are heavily dependent on
their tax haven status. Such support should aim to build a fairer, more
sustainable and diversified economy.
To rebalance the tax system and reduce inequality, the EU and EU
governments should:
•
Acknowledge that the ongoing race-to-the-bottom is harmful for the
sustainability of tax systems, the attainment of the Sustainable Development
Goals and the reduction of inequality;
•
Governments should promote a listing initiative at the global level that
comprehensively assesses the role played by countries in the global tax
race-to-the-bottom. Such an initiative could be one measure in the needed
new set of global reforms on tax, via a UN convention or a UN tax body,
aimed at tackling the issue of tax competition;
•
Increase financial transparency by requiring all large multinational
corporations to make country-by-country reports publicly available for each
country in which they operate, including a breakdown of their turnover,
employees, physical assets, sales, profits and taxes (due and paid), to
enable accurate assessment of whether they are paying their fair share of
taxes.
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1 MOMENTUM FOR AN EU
BLACKLIST
Tax havens facilitate extreme forms of tax dodging and are the ultimate
expression of the global corporate tax race-to-the-bottom.
26
The recent Paradise
Papers
27
showed once again that tax havens are helping big business to cheat
countries and their citizens out of billions of dollars in revenue every year. By
starving countries of money needed for education, healthcare and job creation,
tax havens are exacerbating poverty and inequality across the world.
It is essential to stop this phenomenon by identifying, transforming and
ultimately sanctioning those jurisdictions.
After a number of massive tax scandals such as LuxLeaks
28
and the Panama
Papers,
29
both the EU
30
and the G20/OECD
31
committed to produce blacklists of
tax havens.
In June 2017, the OECD absurdly reported that only one country
–
Trinidad &
Tobago
–
had failed to comply with international transparency standards.
32
Meanwhile, the EU decided to draft a blacklist based on more ambitious
assessment criteria,
33
which it released in November 2016.
34
Those criteria, which include a zero percent corporate tax rate indicator
35
and an
assessment of the fairness of tax systems, are more comprehensive than those
used by the OECD.
36
The first EU list of tax havens, which it calls the
‘list
of non-
cooperative jurisdictions’, is expected to be released on 5 December 2017.
Although Oxfam welcomes the EU initiative and stronger criteria, Oxfam
believes that if, like the OECD, the EU fails to deliver an ambitious, robust and
objective blacklist of tax havens, this will legitimize practices of countries that
are robbing other countries of resources for development.
‘The OECD has
presented its list
using less ambitious
criteria than our own,
but that list leads to
recognizing one
territory as being non-
cooperative. I greatly
admire what the
OECD is doing, for
the impetus the
organization has
given to fight tax
evasion and tax
avoidance but I
believe our list should
be more ambitious if
we want it to be
credible.’
Pierre Moscovici, EU
Commissioner,
ECOFIN, July Public Session
(2017)
The EU blacklist criteria
–
time to be hopeful?
The
EU’s
ambition to produce a blacklist should be seen in the context of other
recent initiatives against harmful tax practices. In just a few years, the EU has
succeeded in enforcing important new rules such as the exchange of
information on cross-border tax rulings
37
and the Anti-Tax Avoidance Directive.
38
Despite some member states blocking progress, the EU has put fair taxation at
the top of its political agenda. Its pursuit of fairer tax rules is in tune with strong
public demand for action. In fact, almost nine in ten Europeans (86% in July
2017) are in favour of
‘tougher
rules on tax avoidance and tax havens’.
39
The EU correctly points out that it needs stronger instruments to tackle external
tax avoidance
40
and to deal with third-country jurisdictions that refuse to play
fair. A single EU blacklist will indeed carry much more weight than the current
patchwork of national lists, and could have an important dissuasive effect on
problematic third-country jurisdictions.
41
To compile its blacklist, the EU uses three sets of criteria: transparency, fair
taxation and participation in international fora on tax. Interestingly, countries with
a zero percent
42
corporate tax rate will also be assessed against the criteria to
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ensure that the rate is not unduly attracting economic activity which is taking
place outside the country. How robustly these criteria will be applied remains to
be seen.
Once identified, tax havens need to be tackled. Only a common and coordinated
set of countermeasures, together with negotiations with third-country
jurisdictions, can really have an impact. The EU is currently considering four
types of sanctions: withholding taxes; imposing new controlled foreign company
(CFC) rules; eliminating deductible costs such as royalties; and participation
exemption limitations.
43
Oxfam urges the EU also to consider limiting access to
EU funds or procurement/investment/partnership contracts for those companies
with a tax-driven presence in listed tax havens. Most importantly, the EU should
implement regional and global initiatives to halt tax competition between
countries.
Since decisions on tax issues require unanimous agreement from all 28 EU
member states,
44
there is a risk of countries not being listed due to political
reasons or a failure to agree on effective countermeasures.
It is now up to the EU to demonstrate that it can produce a robust blacklist to
effectively put an end to tax havens
–
the frontrunners of the current global race-
to-the-bottom on corporate tax.
2 WHAT THE EU BLACKLIST SHOULD
LOOK LIKE
While recognizing that the EU blacklisting criteria fail to capture all corporate tax
havens, Oxfam has conducted a fairly conservative assessment showing which
countries should at the very least be expected to appear on the EU blacklist of
tax havens if the EU were to objectively apply its own criteria and not bow to any
political pressure.
Oxfam evaluated the 92 jurisdictions
45
being screened by the EU listing process,
against the EU’s
three
criteria.
46
•
Criterion 1: Tax transparency:
Countries are exchanging information
automatically and on request; countries are part of the Multilateral
Convention on Mutual Administrative Assistance in Tax Matters.
•
Criterion 2: Fair taxation:
Countries have no harmful preferential tax
measures; countries do not facilitate offshore structures or arrangements
aimed at attracting profits which do not reflect real economic activity in the
jurisdiction. Zero percent tax rate is used as an indicator. It is important to note
that the EU did not disclose the exact methodology for how it will assess this
criterion. Oxfam therefore used economic indicators aiming at only capturing
countries granting tax advantages without any real economic activity taking
place in that country. However, the EU should have more information than is
publicly available and could therefore list more countries than Oxfam does in
this assessment; a move Oxfam would warmly welcome.
•
Criterion 3: Implementation of anti-BEPS measures:
Countries apply or
commit to OECD anti-BEPS minimum standards.
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This assessment resulted in a list of 35 third countries that should appear on the
EU blacklist, as shown in Table 1.
Table 1: Countries which should at the very minimum appear on the EU blacklist,
and why
Jurisdiction
Fails
criterion 1:
Tax
transparency
Fails
criterion 2:
Fair
taxation
Fails criterion 3:
Implementation
of anti-BEPS
measures
Albania
Anguilla
Antigua and Barbuda
Aruba
Bahamas
Bahrain
Bermuda
Bosnia and Herzegovina
British Virgin Islands*
Cook Islands
Cayman Islands
Curaçao
Faroe Islands
Former Yugoslav Republic of
Macedonia
Gibraltar
Greenland
Guam
Hong Kong
Jersey
Marshall Islands
Mauritius*
Montenegro
Nauru
New Caledonia
Niue
Oman
Palau
Serbia
Singapore
Switzerland
Taiwan
Trinidad and Tobago
United Arab Emirates
US Virgin Islands
Vanuatu
8
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
* Indicates that the jurisdiction has been identified as a conduit tax haven.
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To ensure that economic indicators used in this assessment capture only
countries granting tax advantages even without any real economic activity in
that country, Oxfam used high and conservative thresholds. Some countries,
such as Guernsey or Isle of Man, scored just below the thresholds. The EU,
having more access to economic information and being in direct contact with the
countries assessed, could have a list which includes those jurisdictions as well.
If the EU had more information than what is publicly available and which would
lead to other jurisdictions listed, Oxfam would welcome that development.
Many more countries than those appearing on this table have harmful tax
policies. In 2016, Oxfam identified
47
other countries, such as Barbados, as being
corporate tax havens and which are not captured by the current EU criteria,
either because the criteria are not strong enough or because the information
was not available to the public.
Finally, Oxfam took the EU’s
willingness to give a specific treatment to
developing countries into
account. For that reason, low- and middle-income
countries which are solely failing the transparency and BEPS criteria do not
feature in the final Oxfam list unless they are recognized as financial centres
(Malaysia, Marshall Islands, Nauru, Niue, Palau, Panama, Vanuatu are
countries considered to be financial centres) or are EU candidate member
states, OECD and/or G20 members.
But what about EU countries?
Regrettably, EU countries are outside the scope of its listing process.
Oxfam’s
previous analysis indicated that the Netherlands, Luxembourg, Ireland and
Cyprus are among the world’s worst corporate tax havens.
48
Citizens have
witnessed the important role of several EU member states in
multinationals’ tax
avoidance schemes, as shown by the recent Apple and Amazon tax scandals,
which involved Ireland and Luxembourg
49
respectively. Brazil, for example, has
recently decided to add Ireland to its national list of tax havens and has
assessed some European tax regimes as harmful.
50
To ensure that it achieves its stated goal of policy coherence for development,
the EU needs to address the fact that while it is promoting development policies
and providing aid to developing countries, EU tax havens are simultaneously
diverting resources that are badly needed to pay for health and education
services in
the world’s
poorest countries.
In addition, Europe is the region with the lowest nominal average corporate tax
rate in the world.
51
In order to promote fair taxation worldwide, the EU should
also address the practices of its own member states.
Oxfam assessed all 28 EU member states
according to the EU’s own criteria,
and found that at least four EU countries would feature on the EU tax havens
blacklist if screened (Table 2).
52
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Table 2: How EU countries perform against the EU’s listing criteria
Jurisdiction
Fails criterion 1:
Tax
transparency
Fails criterion 2:
Fair taxation
Fails criterion 3:
Implementation of
anti-BEPS measures
Ireland*
Luxembourg
Malta
The Netherlands
X
X
X
X
*Indicates that the jurisdiction has been identified as a conduit tax haven.
The EU should ensure that rules are in place to reform the tax systems of EU
countries
that fail to meet the EU’s
own criteria for being listed as a tax haven. It
should also ensure that related territories of member states, such as overseas
territories, comply with these standards.
Box 1: Brexit, the EU blacklist and the tax race-to-the-bottom
In previous attempts to draw up lists of tax havens, UK Overseas Territories (OTs)
and Crown Dependencies (CDs) have often not been classified as tax havens. This
may have been due to the political influence of the UK within the EU, and attempts
by the UK government to improve some aspects of transparency within the OTs
and CDs. None of the OTs or CDs appeared on the recent OECD list of non-
cooperative jurisdictions. The UK government has also tended to agree with OTs
and CDs that the focus of any blacklist should be on transparency, and has not
included criteria related to tax rates or other aspects of tax policy.
53
However, some OTs and CDs have been at the centre of tax scandals, such as the
British Virgin Islands, which hosts by far the largest number of companies
uncovered in the Panama Papers.
54
Bermuda has been highlighted in the recent
Paradise Papers.
55
A number of OTs and CDs also have a zero percent corporate
income tax rate, arguably putting them at the forefront of a global race-to-the-
bottom. The
UK’s pending withdrawal from the EU
may reduce the ability of the
UK’s OTs and CDs to
stay off the blacklist; indeed, some
OT’s
leaders have
proposed forging new alliances with remaining EU member states.
56
Meanwhile,
the UK has been lowering corporate tax rates (currently 19% and due to drop to
17% by 2020
57
) and protecting tax policies aimed at attracting multinationals to the
UK, including patent boxes. It is not clear how UK corporate tax rates and policies
will change after Brexit. When outside the EU, the UK could set tax policies which
run counter to emerging attempts within the EU to agree a common tax base.
58
Threats to the EU blacklist
An effective blacklist must be free from any vested interests or political
interference.
59
All countries should be assessed objectively, otherwise
multinational companies could simply move their profits to bigger tax havens,
such as Singapore,
60
that would be too powerful to be put on a list.
A transparent and clear blacklisting process is fundamental for its legitimacy and
effectiveness. Yet the
EU’s
fight against tax havens, while driven by the
European Commission, has been in the hands of one of Brussels’ most
secretive working bodies,
61
the so-called Code of Conduct Group.
62
Created in
1998,
63
this preparatory body is composed of national tax officials from
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European member states and meets in Brussels two or three times per
semester. Its mandate stresses that its work should be confidential, so little is
known about the content of the discussions.
64
To the detriment of an informed
public debate and trust, it has been impossible to follow the EU listing process.
Negotiations happen behind closed doors, and all countries participating in the
process refuse to communicate or to release any information.
A major concern is that the whole process will be influenced by economic and
diplomatic considerations that threaten its validity.
65
In the past, the drawing up
of international lists of tax havens has been extremely political; this has led to
jurisdictions such as Hong Kong or Switzerland, which are documented as
having been used as tax havens,
66
mysteriously being left off the lists.
67
While
Switzerland is a key economic partner of the EU,
68
many EU leaders are also
willing to exclude it from its blacklist merely because it is engaging with the EU
on issues relating to exchange of financial information.
69
Meanwhile, aggressive tax jurisdictions such as Bermuda
70
and the Cayman
Islands
71
have started to lobby the EU in the press. The lobby from private
sector actors has also become visible. A Cayman law firm commented:
‘If
there
is any suggestion that the Cayman Islands is
“blacklisted”
by the EU, the
Cayman Islands government should reassess the importance of the EU to the
Cayman Islands and, particularly, in the light of Brexit.’
72
Countries failing the fair taxation criteria should not be removed from the
blacklist until they have abolished their harmful tax measures and stopped
facilitating offshore structures. However, the EU formulated some of the criteria
on transparency and BEPS
73
measures in such a way that countries can meet
them, for the time being, just by making a formal commitment to action. More
positively, the EU formulated its fair taxation criteria such that countries can only
fulfil them through the actual elimination of unfair tax practices.
If the EU intends to stop extreme tax dodging practices via tax havens, halt the
race to the bottom triggered by those tax havens, and avoid the risk of
legitimizing tax havens, it needs to apply strong criteria in an objective way.
Oxfam has urged the EU to ensure that its blacklisting criteria targets damaging
practices that grant substantial tax reductions such as patent boxes, notional
interest deductions or harmful holding regimes, as well as targeting jurisdictions
with zero percent or very low corporate tax rates.
74
This last recommendation
has to some degree
been taken on board in the EU’s indicators.
However, while
Oxfam acknowledges this progress, it concludes that
the EU’s indicators are
still
not strong enough to identify all corporate tax havens.
Tax havens not captured by EU criteria
In 2016, Oxfam released Tax Battles,
75
a report exposing the world’s
most
aggressive corporate tax havens, which are extreme examples of a destructive
race-to-the-bottom on corporate tax. In order of significance, Oxfam identified:
Bermuda, the Cayman Islands, the Netherlands, Switzerland, Singapore,
Ireland, Luxembourg, Curaçao, Hong Kong, Cyprus, Bahamas, Jersey,
Barbados, Mauritius and the British Virgin Islands. The UK did not feature on the
list, but four territories for which the UK is ultimately responsible did appear: the
Cayman Islands, Jersey, Bermuda and the British Virgin Islands.
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While the criteria adopted by the EU follow a similar logic to those proposed by
Oxfam in its report (a combination of transparency, fair taxation and participation
in international tax cooperation), the EU differs on the definition of unfair tax
policies. Oxfam takes a more rigorous approach and considers indicators such
as harmful tax practices, including patent boxes, notional interest deduction and
excess profit rulings. It also looked at absent, or weak, so-called CFC rules.
CFC rules are a very important backstop measure against many corporate tax
avoidance structures, as they allow the home country of a multinational to tax
the profits of subsidiaries located in other countries that apply a significantly
lower tax rate.
As long as the OECD and EU fail to take strong measures to deal with the
above policies, they remain instruments in a regional and global corporate tax
race-to-the-bottom.
76
This race-to-the-bottom on corporate tax rates has accelerated in recent years.
On average, statutory corporate income tax rates in OECD countries decreased
almost a third since 2000, falling from 30.4% to just 22.3% in 2017.
77
When it
comes to effective tax rates, the latest studies show that the actual corporate
income tax rate of the
EU’s
digital sector, for example, is less than 10%.
78
The EU’s refusal to acknowledge the damaging effects of tax competition
between countries has resulted in only limited incorporation of (extremely) low
corporate tax rates in its blacklist indicators.
79
The true list of countries
participating in the corporate tax race-to-the-bottom through harmful tax policies
is therefore longer than the list of countries Oxfam has identified by the EU
indicators.
The second EU criterion,
‘fair
taxation’,
can be interpreted in several ways. It
appears that the EU intends to target jurisdictions that attract and keep profits
which do not correspond to real economic activity taking place in the country.
The EU states:
‘The
jurisdiction should not facilitate offshore structures or
arrangements aimed at attracting profits which do not reflect real economic
activity in the jurisdiction’.
80
However, it should also consider the jurisdictions in
which the profits are transiting
–
i.e. the so-called
‘conduit’ tax havens –
since
they also participate in facilitating offshore structures. At the time of publishing, it
is unclear whether the EU’s criteria will
capture conduit tax havens
81
(denoted
with an asterisk in the tables). Profits go through such jurisdictions but do not
remain there, and eventually end up in a ‘sink’ tax haven.
According to publicly available data, this is particularly the case for countries
such as Mauritius, the British Virgin Islands and Ireland. Ireland, for example,
does not appear to be a country in which profits are parked, yet it seems to play
a vital role in the global network of tax havens. Oxfam discovered that royalties
sent out of Ireland represented more than 26% of
the country’s
GDP in 2015.
82
This is more royalties than are sent out of the rest of the EU combined, and
makes Ireland the world’s number one royalties provider.
While foreign direct investments (FDIs) are supposed to give a picture of global
investments, in some territories such as Malta or the Cayman Islands, FDIs
represent more than 1,000% of GDP. Absurdly, FDIs in and out of the British
Virgin Islands represent 66,950% and 91,569% of GDP respectively.
83
These
figures raise serious questions.
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3 WHY THE EU NEEDS TO ACT
Tax havens swindle developing countries
Tax scandals that have hit the headlines in Europe recently have not only
harmed European countries. When the European Commission concluded that
both the Netherlands and Ireland granted undue tax benefit for Starbucks
(€30m) and Apple (€13bn),
the main headlines forgot to mention that the tax
structures set up in those two countries not only covered sales for the EU but
also for the Middle East, Africa and India.
84
Countries from those regions have
also potentially lost out on taxable income.
The recent Paradise Papers have also shown how West African development
was undermined by the tax practices of multinationals such as Glencore, a
Swiss commodity giant. Until 2017, Glencore owned the Nantou mine in Burkina
Faso through Merope Holdings Ltd, a Glencore subsidiary in Bermuda. The
International Consortium of Investigative Journalists revealed that Glencore
would have used tax tricks to reduce its tax bill in Burkina Faso, notably through
artificial interest payments to two offshore companies in Bermuda.
85
In general, while tax avoidance practices by multinational corporations are a
global problem that is relevant to all countries in developing and developed
countries alike,
86
they remain of greater concern to the Global South. Losses
from corporate tax revenues are estimated to cost developing countries $100bn
a year.
87
Just one-third of that amount would be enough to cover the cost of
essential healthcare that could prevent the needless deaths of eight million
people.
88
Corporate tax continues to be more important for developing countries’
exchequers, accounting for 16% of tax receipts compared with a little more than
8% of tax receipts for high-income countries.
89
Some international organizations, such as the Committee on the Elimination of
Discrimination against Women (CEDAW), have started to recognize the harm
tax havens cause to the poorest people in the world, the majority of whom are
women.
90
In 2016, CEDAW expressed its concerns about Switzerland’s
‘financial
secrecy
policies and rules on corporate reporting and taxation [that] have a potentially
negative impact on the ability of other States,
[…],
to mobilise the maximum
available resources for the fulfilment of women’s
rights’.
91
Governments have a responsibility to protect and improve corporate tax
collection, which is needed to provide public services.
92
Tax avoidance and tax
loopholes almost exclusively benefit the rich. Latest estimates by Oxfam show
that just eight men own the same wealth as the poorest half of humanity.
93
As
growth benefits the richest, the rest of society suffers
–
especially the poorest
people. Fighting tax dodging, and in particular targeting tax havens, is an
effective way for governments to reduce inequality and poverty while sustaining
growth.
94
Fairer revenue redistribution tied to education, especially for girls, can
reduce gender inequality and boost
women’s
empowerment.
95
Tax havens are ripping off developing countries while bringing few benefits to
local people. While the Panama Papers
96
have put the Central American
13
‘The policeman on
the beat, the
nurse who is
attending to a
patient, the
teacher who is
inspiring young
minds, the
scientist who is
conducting
cutting-edge basic
research: these
are only some of
the people who
could not do their
work without
reliable
government
income.’
Christine Lagarde, IMF
Managing Director, Abu
Dhabi, February 2016
 EUU, Alm.del - 2017-18 - Bilag 182: Henvendelse af 29/11-17 fra Oxfam IBIS om sortlistning af skattely
republic of Panama under the spotlight, the vast majority of the population has
nothing to do with tax avoidance schemes. In fact, in 2015 almost 32% of
Panamanians were still living below the poverty line, with 10.3% in extreme
poverty.
97
Ninety percent of citizens living in rural areas of Panama are
considered by the United Nations Development Programme (UNDP) to be poor
or extremely poor.
98
While Latin American countries spend on average 14.5% of
GDP on social public expenditure,
99
Panama spent just 8.4% of its GDP on
social public expenditure in 2014, and this has been in continual decline since
2009.
100
Tax havens and the tax race-to-the-bottom are not benefitting anybody but a
small elite composed of rich individuals and large multinationals. In May 2016,
300 economists including Thomas Piketty and Jeffrey Sachs told world leaders:
‘Tax
havens
have no economic justification.’
101
The leading auditing firm PwC
102
recently confirmed that the use of tax havens by companies and individuals to
avoid paying tax will soon be
‘unacceptable’.
For many citizens worldwide, it is
already unacceptable. The EU needs to stop the current lose-lose tax
competition, starting by adopting an ambitious list of tax havens on 5 December
2017.
RECOMMENDATIONS
It is time for the EU to take meaningful action to hold multinationals and
problematic tax jurisdictions
–
including some EU member states
–
to account,
to stop resources being diverted from developing countries. Tax havens are the
result of a rigged global tax system. They are playing a leading role in the global
corporate tax race-to-the-bottom. This must change if we want to finance
development and fight inequality around the globe.
To efficiently end tax havens, the EU and EU governments should:
•
Adopt a clear and ambitious blacklist of tax havens, based on objective
criteria and free from political interference. The EU should work towards a
gradual improvement of its own criteria to cover all harmful tax practices;
•
Introduce transparency regarding the listing process by disclosing the exact
methodology used for analysing countries, as well as a summary of third-
country interactions with the Code of Conduct Group during the listing
process. Greater transparency will ensure that EU member states’
decisions
are not influenced by diplomatic or economic pressure;
•
Adopt strong common and coordinated defensive measures against
blacklisted countries to limit base erosion and profit shifting. As a top priority,
countries should at least implement stronger Controlled Foreign Company
(CFC) rules, enabling countries to tax profit that has been artificially parked in
tax havens;
•
Take appropriate measures against EU tax havens. This should include
adopting new legislation on harmful tax practices, a minimum effective tax
rate for risky types of payments such as royalties and interests
103
and
adopting common tax rules such as those proposed in Common
Consolidated Corporate Tax Base C(C)CTB;
104
•
Provide support and direction to jurisdictions which are heavily dependent on
14
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their tax haven status. Such support should aim to build a fairer, more
sustainable and diversified economy.
To rebalance the tax system and reduce inequality, the EU and EU
governments should:
•
Acknowledge that the ongoing race-to-the-bottom is harmful for the
sustainability of tax systems, the attainment of the Sustainable Development
Goals and the reduction of inequality;
•
Governments should promote a listing initiative at the global level that
comprehensively assesses the role played by countries in the global tax
race-to-the-bottom. Such an initiative could be one measure in the needed
new set of global reforms on tax, via a UN convention or a UN tax body,
aimed at tackling the issue of tax competition;
•
Increase financial transparency by requiring all large multinational
corporations to make country-by-country reports publicly available for each
country in which they operate, including a breakdown of their turnover,
employees, physical assets, sales, profits and taxes (due and paid), to
enable accurate assessment of whether they are paying their fair share of
taxes.
Annex I
The database analysing the 92 jurisdictions (shortlisted by the EU) and the 28
EU countries screened by Oxfam and the research methodology are available
here [link]
15
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NOTES
1
2
3
ICIJ (2017) The Paradise Papers https://www.icij.org/investigations/paradise-papers/
D. Hardoon (2017). An Economy for the 99%: It’s time to build a human economy that benefits
everyone, not just the privileged few. Oxfam. https://oxf.am/2sozLKI
Oxfam (2017) A third of tax dodged in poor countries enough to prevent 8m deaths a year,
https://www.oxfam.org.uk/media-centre/press-releases/2017/10/a-third-of-tax-dodged-in-poor-
countries-enough-to-prevent-8m-deaths-a-year
Oxfam (2017b) EU can't afford to fudge tax haven blacklist
https://www.oxfam.org/en/pressroom/pressreleases/2016-11-07/eu-cant-afford-fudge-tax-haven-
blacklist
OECD (2017) Strong progress seen on international tax transparency
http://www.oecd.org/tax/transparency/strong-progress-seen-on-international-tax-
transparency.htm
Such as patent boxes, notional interests deduction, excess profit rulings
Esmé Berkhout (2016). Tax Battles: The dangerous global race to the bottom on corporate tax.
Oxfam Briefing Paper. http://oxf.am/ZuCG
European Commission, State Aid
–
Tax rulings,
http://ec.europa.eu/competition/state_aid/tax_rulings/index_en.html
ICIJ (2017), op. cit.
4
5
6
7
8
9
10 Council of the EU (2017) Follow-up to the Council conclusions of 8 November 2016 on
‘Criteria
and process leading to the establishment of the EU list of non-cooperative jurisdictions for tax
purposes’
− State of play 6325/17
11 OECD, https://www.oecd.org/tax/transparency/AEOI-commitments.pdf ; OECD,
http://www.oecd.org/tax/transparency/exchange-of-information-on-request/ratings/ ; OECD,
http://www.oecd.org/tax/exchange-of-tax-information/Status_of_convention.pdf
12 Based on OECD Preferential Regimes in BEPS action 5, OECD Preferential Regimes in Peer
review July 2017, OECD Preferential Regimes in Progress Report October 2017 and European
Commission Scoreboard published in 2016.
13 Eurostat, http://appsso.eurostat.ec.europa.eu/nui/show.do?dataset=bop_its6_det&lang=en
14 UN Stats, http://unctadstat.unctad.org/wds/ReportFolders/reportFolders.aspx
15 IMF, http://data.imf.org/regular.aspx?key=60979251 And http://cdis.imf.org
16 The Base Erosion and Profit Shifting package provides 15 Actions negotiated in the G20/OECD
framework and aimed at tackling BEPS. It includes four minimum standards that committed
countries have to implement. OECD, https://www.oecd.org/ctp/beps/inclusive-framework-on-
beps-composition.pdf
17 UNCTAD (2015) World Investment Report 2015,
http://unctad.org/en/PublicationsLibrary/wir2015_en.pdf
18 D. Hardoon (2017). An Economy for the 99%. Op cit.
19 IMF (2015) IMF Working Paper, Base Erosion, Profit Shifting and Developing Countries
https://www.imf.org/external/pubs/ft/wp/2015/wp15118.pdf
20 IMF Policy Paper (2015) Fiscal Policy and Long-term Growth, p. 31
https://www.imf.org/external/np/pp/eng/2015/042015.pdf
21 ICIJ (2016). The Panama Papers. https://panamapapers.icij.org/
22
Panama does not rank high on the EU’s ‘Fair Taxation’ indicator.
This can be explained by the
fact that Panama is mainly a tax haven for individuals hiding their wealth and is less attractive for
corporations. In fact, most companies registered in Panama in the Panama Papers had links with
the British Virgin Islands.
23 Alternative Economiques (2017). Panama: pauvres dans un paradis fiscal.
https://www.alternatives-economiques.fr/panama-pauvres-un-paradis-
fiscal/00079711?t=14bfa6bb14875e45bba028a21ed38046
24 European Commission (2011). Proposal on a common system of taxation applicable to interest
and royalty payments made between associated companies of different Member states
COM(2011) 714 final
–
In 2011 the European Commission launched a proposal to improve the
taxation of passive income such as royalties and interests. Divisions among member states,
16
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especially regarding the implementation of a minimum effective tax rate, has thus far
prevented the adoption of such legislation.
25 European Commission (2016) Proposals for Council Directives on a Common Corporate
Tax Base and on a Common Corporate Consolidated Tax Base 2016/0337 (CNS) and
2016/0336 (CNS). CCCTB is currently a two-step plan. First, all EU counties adopt a
common corporate tax base (a CCTB, with two Cs). This involves harmonizing rules for
interest deductions, treatment of R&D expenses, transfer pricing rules, etc. During that
first step, each member state still determines taxable profits separately, but they do so
in exact the same way. With a consolidated tax base (CCCTB with three Cs), a firm’s
taxable profits are no longer determined at the level of individual EU member states, but
for the EU as a whole
–
they are consolidated at EU-level. Member states then use a
formula to determine what share of the profits can be taxed by each member state.
26 As an illustration, globally corporate tax rates have fallen from an average of 27.5% just
10 years ago to 23.6% today, and this process also shows signs of accelerating. Oxfam
(2016) op. cit.
27 ICIJ (2017) op.cit.
28
ICIJ (2014) Luxembourg Leaks: Global companies’ secrets exposed,
https://www.icij.org/project/luxembourg-leaks
29 ICIJ (2016) op. cit.
30 Council of the EU (2016) Council conclusions on an external taxation strategy and
measures against tax treaty abuse (9452/16),
http://data.consilium.europa.eu/doc/document/ST-9452-2016-INIT/en/pdf
31 G20 (2016) Communiqué G20 Finance Ministers and Central Bank Governors Meeting
of April 2016,
http://wjb.mof.gov.cn/pindaoliebiao/gongzuodongtai/201604/t20160416_1952794.html
32 Financial Times (2017) Trinidad & Tobago left as the last blacklisted tax haven,
https://www.ft.com/content/94d84054-5bf0-11e7-b553-e2df1b0c3220. Because this
country does not have a big financial sector it was not identified as being a significant
risk and the G20 list is therefore essentially non-existent.
33 Pierre Moscovici, ECOFIN, July Public Session (2017).
https://video.consilium.europa.eu/en/webcast/1b082df5-e08e-4dfb-b475-4705b253f864
min 14:40
34 Council of the EU (2016) Council Conclusions on Criteria and process leading to the
establishment of the EU list of non-cooperative jurisdictions for tax purposes (14166/16),
http://data.consilium.europa.eu/doc/document/ST-14166-2016-INIT/en/pdf
35 Reuters (2017) EU agrees new rules to tackle multinationals tax avoidance,
https://www.reuters.com/article/us-eu-ecofin-taxation/eu-agrees-new-rules-to-tackle-
multinationals-tax-avoidance-idUSKBN1601DF?il=0
36 The EU finance ministers agreed that to avoid being on the future blacklist, third
countries would not only have to comply with international transparency standards, but
also to comply with fair taxation indicators. This is an important development as the EU,
unlike the OECD, has decided to shift from a sole focus on opacity of tax systems to a
criterion on fair taxation.
37 European Union (2015) Council Directive amending Directive 2011/16/EU as regards
mandatory automatic exchange of information in the field of taxation 12802/15
38 European Union (2016) Council Directive (EU) 2016/1164 of 12 July 2016 laying down
rules against tax avoidance practices that directly affect the functioning of the internal
market.
39 Directorate-General for Communication of the European Commission (2017) Public
opinion in the European Union, July 2017, https://publications.europa.eu/fr/publication-
detail/-/publication/51abaf14-6b6e-11e7-b2f2-01aa75ed71a1/language-en/format-PDF
40 European Commission (2016) Communication on an External Strategy for Effective
Taxation, COM/2016/024 final
41 European Commission (2016) Common EU list of third country jurisdictions for tax
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purposes, https://ec.europa.eu/taxation_customs/tax-common-eu-list_en
42 Council of the EU (2017) op. cit.
43 BNA Bloomberg (2017) EU Mulls Options for Sanctions for Tax Haven Blacklist,
https://www.bna.com/eu-mulls-options-n73014463075/
44 European Union (2012) Treaty of the Functioning of the European Union, Art. 115
45 Euractiv (2017) Member states’
broad definition of tax havens raises concerns,
https://www.euractiv.com/section/economy-jobs/news/member-states-broad-definition-
of-tax-havens-raises-concerns/
46 Council of the EU (2016) op. cit. ; Criteria adopted by the Council of the EU on
November 2016 are detailed when it comes to transparency and exchange of
information. It is, however, harder to understand how criterion 2, fair taxation, will be
assessed in practice.
47 Esmé Berkhout (2016). Tax Battles: The dangerous global race to the bottom on
corporate tax. Op.cit.
48 Esmé Berkhout (2016). Tax Battles: The dangerous global race to the bottom on
corporate tax. Op.cit.
49 European Commission, State Aid
–
Tax rulings,
http://ec.europa.eu/competition/state_aid/tax_rulings/index_en.html
50 PwC (2016) Insight
–
Brazil adds Ireland to tax haven list and Austrian holding
companies to privileged tax regime list, http://www.pwc.com/us/en/tax-
services/publications/insights/brazil-adds-ireland-to-tax-haven-list.html
51 Tax Foundation (2017) Corporate Income Tax Rates around the World, 2017
https://taxfoundation.org/corporate-income-tax-rates-around-the-world-2017/
52 For more information about criteria and how the jurisdiction performed, see Annex I.
53 Guardian (2016) Treasury tries to thwart EU plans for tax haven blacklist,
https://www.theguardian.com/world/2016/nov/07/treasury-tries-to-thwart-eu-plans-for-
tax-haven-blacklist
54 ICIJ (2016) op. cit.
55 ICIJ (2017) op.cit.
56 Jersey Evening Post (2017) EU may blacklist Jersey as tax haven post-Brexit
https://jerseyeveningpost.com/news/2017/01/24/eu-may-blacklist-jersey-as-tax-haven-
post-brexit/
57 HM Revenue & Customs (2016) Corporation Tax to 17% in 2020
https://www.gov.uk/government/publications/corporation-tax-to-17-in-2020
58 European Commission (2016), Proposals for Council Directives on a Common
Corporate Tax Base and on a Common Corporate Consolidated Tax Base 2016/0337
(CNS) and 2016/0336 (CNS)
59 Independent (2017) Jeremy Corbyn confronts Theresa May about private jet owners
dodging tax in Isle of Man, http://www.independent.co.uk/news/uk/politics/jeremy-
corbyn-private-jet-owners-tax-dodge-isle-of-man-investigation-super-rich-labour-pmqs-
a8031421.html
60 Eurodad (2016) The false EU promise of listing tax havens
http://eurodad.org/Entries/view/1546593/2016/05/27/The-false-EU-promise-of-listing-
tax-havens
61 EuObserver (2017) Inside the Code of Conduct,
the EU’s most secretive group,
https://euobserver.com/institutional/138550
62 Council of the EU (retrieved in 2017) Presentation of preparatory bodies: Code of
Conduct Group (Business Taxation), http://www.consilium.europa.eu/en/council-
eu/preparatory-bodies/code-conduct-group/
63 Council of the EU (1998) Council Conclusions of 9 March 1998 concerning the
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1825001_0019.png
establishment of the Code of Conduct Group (business taxation)
64 EuObserver (2017) op. cit.
65 Euractiv (2016) Member states play politics with tax havens blacklist,
https://www.euractiv.com/section/euro-finance/news/member-states-play-politics-with-
tax-havens-blacklist/
66 Tax Justice Network (2016) Will the OECD tax haven blacklist be another whitewash?
http://www.taxjustice.net/2016/07/20/oecd-another-go-hopeless-politicised-tax-haven-
blacklisting/
67 Tax Analysts (2007) Lessons From the Last War on Tax Havens,
http://www.taxjustice.net/cms/upload/pdf/Tax_Notes_0707_Lessons_from_the_war_on_
tax_havens.pdf
68 European External Action Service (retrieved in 2017) Switzerland and the EU. In 2015,
Switzerland was the EU’s third largest trading partner after the US and China. The EU is
Switzerland’s largest trading partner by far.
https://eeas.europa.eu/headquarters/headquarters-
homepage_en/7700/Switzerland%20and%20the%20EU
69
Mission de la Suisse auprès de l’union européenne, (retrieved 2017)
Politique fiscale
–
conformité avec les normes internationales. ‘La Suisse et l’UE ont décidé en octobre
2014 que la Suisse abolira certains régimes fiscaux que l’UE considère comme des
régimes qui faussent la concurrence. L’UE s’est du coup déclaré prête à renoncer à
d’éventuelles sanctions. Après l'échec de la troisième réforme de l’imposition des
entreprises (RIE III) lors de la votation populaire le gouvernement suisse essayera de
présenter rapidement un nouveau projet visant à abolir certains régimes fiscaux par des
mesures qui seront accepté sur le plan international.’
https://www.eda.admin.ch/missions/mission-eu-brussels/fr/home/dossiers-
prioritaires/politiquefiscale.html
70 Bermuda Insurance magazine (2017) Bermuda under EU blacklist threat, claims
Richards, https://www.bermudareinsurancemagazine.com/news/bermuda-under-eu-
blacklist-threat-claims-richards-3350
71
Cayman Compass (2017) European Union ‘blacklist’ decision due in December,
https://www.caymancompass.com/2017/10/05/european-union-blacklist-decision-due-
in-december/
72 Ibid.
73 OECD (2015) OECD/G20 Base Erosion and Profit Shifting Project, Executive
Summaries 2015 Final Reports
74 Esmé Berkhout (2016). Tax Battles: The dangerous global race to the bottom on
corporate tax. Op.cit.
75 Esmé Berkhout (2016). Tax Battles: The dangerous global race to the bottom on
corporate tax. Op.cit.
76 Oxfam (2016) EU finance ministers unwilling to address tax avoidance,
https://www.oxfam.org/en/pressroom/reactions/eu-finance-ministers-unwilling-address-
tax-avoidance
77 OECD Stats (retrieved in 2017) Table II.1. Statutory corporate income tax rate and
Oxfam calculation, http://stats.oecd.org/index.aspx?DataSetCode=TABLE_II1
78 European Commission (2017) Communication on A Fair and Efficient Tax System in the
European Union for the Digital Single Market COM(2017) 547 final
79 European Commission (2016) Fair Taxation: Commission presents new measures
against corporate tax avoidance, http://europa.eu/rapid/press-release_IP-16-
159_en.htm.
‘Transparency is crucial to identifying aggressive tax planning practices by
large companies and to ensuring fair tax competition’
80 Council of the EU (2016) op. cit.
81 CORPNET (2017) Offshore Financial Centers and The Five Largest Value Conduits in
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the World, http://corpnet.uva.nl/ofcs/
82 For more information about criteria and how the jurisdiction performed, see Annex I
83 UNCTACT STADT, Foreign Direct Investment as percentage of GDP, data for 2015,
http://unctadstat.unctad.org/wds/ReportFolders/reportFolders.aspx
84 European Commission (2015) Commission decides selective tax advantages for Fiat in
Luxembourg and Starbucks in the Netherlands are illegal under EU state aid rules,
http://europa.eu/rapid/press-release_IP-15-5880_en.htm; European Commission (2016)
State aid: Ireland gave illegal tax benefits to Apple
worth up to €13 billion,
http://europa.eu/rapid/press-release_IP-16-2923_en.htm
85 The Irish Times (2017) Paradise Papers: West African development dreams stand still
while mining money moves offshore https://www.irishtimes.com/business/paradise-
papers-west-african-development-dreams-stand-still-while-mining-money-moves-
offshore-1.3280735
86 UNCTAD (2015b) United Nations report urges greater coherence between international
tax and investment policies,
http://unctad.org/en/pages/PressRelease.aspx?OriginalVersionID=253
87 UNCTAD (2015a) op. cit.
88 Oxfam (2017b) op. cit.
89 IMF (2015) op. cit.
90
UN Stats (2015) The World’s Women 2015: Trends and Statistics,
https://unstats.un.org/unsd/gender/downloads/WorldsWomen2015_report.pdf
91 Committee on the Elimination of Discrimination against Women (CEDAW) (2016)
Concluding observations on the combined fourth and fifth periodic reports of Switzerland
p.13
92 IMF (2017) Opening remarks by Christine Lagarde, Revenue Mobilization and
International Taxation,
https://www.imf.org/en/News/Articles/2015/09/28/04/53/sp022216
93 D. Hardoon (2017). An Economy for the 99%:
It’s time to build a human economy that
benefits everyone, not just the privileged few. Oxfam. https://oxf.am/2sozLKI
94 Esmé Berkhout (2016). Tax Battles: The dangerous global race to the bottom on
corporate tax. Op. cit. p.2; D. Hardoon (2017). An Economy for the 99%. Op. cit.
95 IMF Policy Paper (2015) op. cit. p.31
96 ICIJ (2016) op. cit.
97 Alternative Economiques (2017) op. cit.
98 Ibid.
99 CEPAL (2015) Latin America (19 countries): social expenditure of public sector, 2000-
2015 (Percentages of GDP and of total public expenditure),
http://observatoriosocial.cepal.org/inversion/en/chart/latin-america-19-countries-social-
expenditure-public-sector-2000-2015-percentages-gdp-and
100 CEPAL (2015) Panama: social expenditure of central government, 2000-2015
(Percentages of GDP and of total public expenditure),
http://observatoriosocial.cepal.org/inversion/en/countries/panama
101 The Guardian (2016). Tax havens have no economic justification, say top economists.
https://www.theguardian.com/world/2016/may/09/tax-havens-have-no-economic-
justification-say-top-economists?CMP=Share_iOSApp_Other
102 Business Insider (2017) The use of tax havens to avoid paying taxes will soon be
‘unacceptable,’ says PwC,
http://uk.businessinsider.com/pwc-report-tax-havens-
unacceptable-2017-10?r=UK&IR=T
103 European Commission (2011) Proposal on a common system of taxation applicable to
interest and royalty payments made between associated companies of different Member
 EUU, Alm.del - 2017-18 - Bilag 182: Henvendelse af 29/11-17 fra Oxfam IBIS om sortlistning af skattely
states COM(2011) 714 final
–
In 2011 the European Commission launched a proposal
to improve the taxation of passive income such as royalties and interests. Divisions
among member states, especially regarding the implementation of a minimum effective
tax rate, has thus far prevented the adoption of such legislation.
104 European Commission (2016) Proposals for Council Directives on a Common
Corporate Tax Base and on a Common Corporate Consolidated Tax Base 2016/0337
(CNS) and 2016/0336 (CNS). CCCTB is currently a two-step plan. First, all EU counties
adopt a common corporate tax base (a CCTB, with two Cs). This involves harmonizing
rules for interest deductions, treatment of R&D expenses, transfer pricing rules, etc.
During that first step, each member state still determines taxable profits separately, but
they do so in exact the same way. With a consolidated tax base (CCCTB with three Cs),
a firm’s taxable profits are no longer determined at the level of individual EU
member
states, but for the EU as a whole
–
they are consolidated at EU-level. Member states
then use a formula to determine what share of the profits can be taxed by each member
state.
 EUU, Alm.del - 2017-18 - Bilag 182: Henvendelse af 29/11-17 fra Oxfam IBIS om sortlistning af skattely EUU, Alm.del - 2017-18 - Bilag 182: Henvendelse af 29/11-17 fra Oxfam IBIS om sortlistning af skattely EUU, Alm.del - 2017-18 - Bilag 182: Henvendelse af 29/11-17 fra Oxfam IBIS om sortlistning af skattely
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© Oxfam International November 2017
This paper was written by Aurore Chardonnet and Johan Langerock. Oxfam acknowledges the
assistance of Michael McCarthy Flynn, Francis Weyzig, Esmé Berkhout, Susana Ruiz
Rodriguez, Nina Monjean, Oli Pearce and Max Lawson in its production. It is part of a series of
papers written to inform public debate on development and humanitarian policy issues.
For further information on the issues raised in this paper please e-mail
[email protected]
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The information in this publication is correct at the time of going to press.
Published by Oxfam GB for Oxfam International under ISBN 978-1-78748-125-1 in November
2017. DOI: 10.21201/2017.1251
Oxfam GB, Oxfam House, John Smith Drive, Cowley, Oxford, OX4 2JY, UK.
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