A number of states within the European Union (EU) want it to widen its view of what it considers to be tax havens and impose stricter sanctions on countries facilitating tax avoidance.
A document prepared for the EU by the Danish government calls for a discussion on whether current criteria provide sufficient protection against tax avoidance and evasion. It emphasises the importance of a tougher approach, arguing that there is a need for the EU to discuss the current safeguards it has in place.
While the views in the document have some support, some EU countries – namely Luxembourg, Ireland and the Netherlands – may view it as an attack on their use of low taxation to make themselves attractive locations for foreign firms.
A meeting of EU finance ministers has already seen some member states support the Danish proposal. Croatia, which will hold the EU chair from January, has said the situation will be reviewed during its six-month presidency.
Revelations this decade of widespread tax avoidance schemes used by corporations and wealthy individuals prompted the EU to set up a blacklist in 2017. Foreign jurisdictions are blacklisted if they do not meet EU tax transparency and regulation standards.
Countries that commit to making changes are included on a so-called "grey list'' until those changes are introduced. If they miss deadlines, they are placed on the blacklist. But critics believe the current definition of tax havens is too narrow and are unhappy that the arrangement only screens non-EU countries, on the basis that its states are already tackling tax avoidance.
Learn how to co-ordinate a response to tax evasion allegations by reading Rahman Ravelli's online guide here.
It will be interesting to see whether the implementation of the EU's Fifth Anti-Money Laundering Directive in January 2020 has a genuinely positive effect when it comes to introducing further tax transparency measures in the EU.
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