Denouncing the "shocking" revelations of the "Paradise Papers" leaks that reveal how top companies and dignitaries hid their wealth in form of offshore investments to avoid taxes, the European Union said it will discuss plans for a tax havens’ blacklist in a bid to tackle offshore tax avoidance.
A meeting of the Finance Ministers of EU members will discuss the tax avoidance on Tuesday, officials said. The subject was put on the agenda only after the report by the International Consortium of Investigative Journalists (ICIJ) and its media partners was published on Sunday.
A trove of leaked documents, termed "Paradise Papers", have exposed how global elite invested their wealth in tax havens to avoid paying taxes in their home countries. The documents were obtained by Germany’s Sueddeutsche Zeitung newspaper and shared with the ICIJ and partner media outlets.
The revelations “put renewed emphasis on the work the European Commission is doing to fight tax avoidance”, Valdis Dombrovskis, vice president of the EU’s executive arm, said on Monday.
Officials said that EU countries had planned for months to reach an agreement on a blacklist for tax havens by the end of this year and the leaks have only expedited the discussion. They, however, added that no final decision was expected on Tuesday.
The EU had also discussed measures to crack down on tax avoidance after last year's “Panama Papers”, also by the ICIJ and its media partners. The proposals include an EU-wide list of tax havens meant to discourage the rerouting of profits made in the EU to tax-free or low-tax countries, like Panama or Bermuda.
Currently, each EU member has its own list of jurisdictions which heavily vary from nation to nation.
The discussion on Paradise Papers may include possibility of sanctions in case of a non-compliance with a EU-wide blacklist.
“It’s time that we agree and publish a blacklist on tax havens,” EU tax commissioner Pierre Moscovici said. He called for a “credible” list and “adequate sanctions” when serious breaches are unveiled.
Some EU states are sceptical about the blacklist as they themselves are under scrutiny for providing tax heavens. In the recently leaked papers, several companies have been found to be registered in Malta, an EU member state, to avoid taxes. Luxembourg and Ireland also attract firms with lower corporate taxes.
Leaked documents also have the name of Britain's Queen Elizabeth II among other internationally known figures.
“Paradise Papers”, a cache of 13.4 million financial documents, reveals data of over 25,000 companies spanning 180 countries, from 1950 to 2016. The leaks contain documents mainly from Appleby, an offshore law firm with offices in Bermuda and beyond, from the smaller, family-owned trust company, Asiaciti (Singapore) and from company registries in 19 secrecy jurisdictions.
The mention of names on the list does not mean that such entities have generated tainted money or evaded taxes.