Earlier today, EU finance ministers agreed 17 countries including South Korea, Panama, Saint Lucia, Samoa, Trinidad and Tobago, Tunisia and the United Arab Emirates (UAE) are not doing enough to crack down on offshore tax avoidance schemes.
These countries and American Samoa, Bahrain, Barbados, Grenada, Guam, Macau, Marshall Islands, Mongolia, Namibia, Palau, now face restrictions on EU funding or potential investments from the European Investment Bank, while the governments of member states are able to impose their own sanctions on the blacklisted states.
However, the blacklist has already been condemned for being “politically led” after EU countries including Luxembourg and Ireland were left off the list.
Alex Cobham, chief executive of the Tax Justice Network, said: “Rather than have a list of tax havens based on an objective set of criteria, as originally envisaged, the list appears to be a political fix with EU members picking their least favourite countries to name and shame.
“The result of the flawed blacklisting process is a politically led list, that includes only the economically weak and politically unconnected.
“While EU members like the Netherlands, Ireland and Luxembourg are the greatest procurers of global profit shifting but are excluded; and while the UK has sought to frustrate the blacklisting of its Crown Dependencies and Overseas Territories at every turn, the list is hard to take seriously.”
Sven Giegold, economics spokesman for the Green group, said the result of today’s meeting was a “whitewashed blacklist”.
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The MEP said: “It undermines the EU’s credibility that Member States were only able to agree on a whitewashed blacklist of tax havens.
“Not one of the most important tax havens has been put on the list. The list is politically biased as relevant financial centers like the United States of America are missing.”
Tove Maria Ryding, tax coordinator at Eurodad, the European Network on Debt and Development, said certain EU members ought to have been included in the list if the bloc seriously intended to crack down on tax havens.
She said: “If EU governments really wanted to get rid of tax havens, they should be open about the fact that several EU member states, such as Luxembourg, Ireland and the Netherlands, also have to fundamentally change their behaviour.”
A number of UK overseas territories including the Cayman Islands and Bermuda have been excluded from the list.
The damage caused by hurricanes earlier this year has meant British Virgin Islands, Anguilla and Turks & Caicos are in a group of eight that have until February to get their fiscal policy in order.
Mr Giegold called the decision a “bad joke”.
He said: “It is a bad joke that due to the hurricanes, eight Caribbean islands have been given additional time to answer the information requests from the Council.
“The EU has to clean up its own house. Likewise, the whole blacklisting process needs to become fully transparent and the reform of the Code of Conduct Group shall not be delayed any longer.”
Blacklisted countries may no longer be used by EU institutions for international financial operations, and transactions involving them could be subject to closer scrutiny.
EU tax commissioner Pierre Moscovici said: “This list represents substantial progress. Its very existence is an important step forward. But because it is the first EU list, it remains an insufficient response to the scale of tax evasion worldwide.”