How EU tax crackdown will affect UAE, Bahrain and Tunisia
How EU tax crackdown will affect UAE, Bahrain and Tunisia
The main weapon will be funding restrictions to be imposed by the European Fund for Sustainable Development (EFSD), the European Fund for Strategic Investment (EFSI) and the External Lending Mandate (ELM).
Direct funding for projects on the ground in those countries — already subject to checks before loans are released – will not be affected.
The real targets are entities through which funds are channeled to other projects overseas, in places such as Africa and India, a Brussels source told Arab News.
These entities would include banks, private equity funds, asset managers and even government-linked bodies.
The three countries are among 17 jurisdictions to be punished following an EU probe.
A statement said: “The EU list should have a real impact on the countries concerned, thanks to new legislative measures.”
Brussels said new EU proposals would also, in time, impose stricter reporting requirements for multinationals with activities in “listed” states. Additionally, a tax scheme routed through an EU listed country would automatically be reported to the tax authorities, the statement said.
The European Commission is examining legislation in other policy areas, “to see where further consequences for listed countries can be introduced.”
Individual EU states have agreed they could also opt to trigger a number of other measures such as increased monitoring and audits, withholding taxes, special documentation requirements and anti-abuse provisions.
According to Brussels: “The Commission will support member states’ work to develop a more binding and definitive approach to sanctions for the EU list in 2018.”
As well as the UAE, Bahrain and Tunisia, other countries on the so-called tax haven blacklist are: American Samoa, Barbados, Grenada, Guam, South Korea, Macau, the Marshall Islands, Mongolia, Namibia, Palau, Panama, St. Lucia, Samoa, and Trinidad & Tobago.
A “watchlist” of 47 countries promising to change their tax rules to meet EU standards has also been issued.
This “grey list” includes several with UK links, including Hong Kong, Jersey, Bermuda and the Cayman Islands, as well as Switzerland and Turkey.
The lists follow the leaking of the Panama Papers and the Paradise Papers, revealing how companies and individuals hid their wealth from tax authorities around the world in offshore accounts.
To determine whether a country is a “non-cooperative jurisdiction,” the EU index measures the transparency of its tax regime, tax rates and whether the tax system encourages multinationals to unfairly shift profits to low tax regimes to avoid higher duties in other states. In particular, these include tax systems that offer incentives such as percent corporate tax to foreign companies.
UK-based tax campaigners have said EU countries will be encouraged to disallow payments made to blacklisted countries for tax purposes, or to charge withholding taxes on interest payments to them.
The EU campaign is designed to force countries to take measures to reform their tax systems as it seeks to clampdown on corporate tax avoidance around the world.
Current EU plans are to reconsider the lists annually. Developed grey-list countries have one year to deliver on their reform promises, while developing nations have two years, said the EU.
German industry groups warn US on tariffs before Trump-Juncker meeting
- Washington imposed tariffs on steel and aluminum imports from the EU, Canada and Mexico on June 1
- Trump is threatening to extend them to EU cars and car parts
BERLIN: German industry groups warned on Sunday, before European Commission President Jean-Claude Juncker meets US President Donald Trump this week, that tariffs the United States has imposed or is threatening to introduce risk harming America itself.
Citing national security grounds, Washington imposed tariffs on steel and aluminum imports from the EU, Canada and Mexico on June 1 and Trump is threatening to extend them to EU cars and car parts. Juncker will discuss trade with Trump at a meeting on Wednesday.
“The tariffs under the guise of national security should be abolished,” Dieter Kempf, head of Germany’s BDI industry association said. Juncker should tell Trump that the United States would harm itself with tariffs on cars and car parts, he told Welt am Sonntag newspaper.
The German auto industry employed more than 118,000 people in the United States and 60 percent of what they produced was exported. “Europe should not let itself be blackmailed and should put in a confident appearance in the United States,” he added.
German Economy Minister Peter Altmaier told Deutschlandfunk radio on Sunday he hoped it was still possible to find a solution that was attractive to both sides. “For us, that means we stand by open markets and low tariffs,” he said
He said the possibility of US tariffs on EU cars was very serious and stressed that reductions in international tariffs in the last 40 years and the opening of markets had resulted in major benefits for citizens.
EU officials have tried to lower expectations about what Juncker can achieve, and played down suggestions that he will arrive in Washington with a novel plan to restore good relations.
Altmaier said it was difficult to estimate the impact of any US car tariffs on the German economy, but added: “Tariffs on aluminum and steel had a volume of just over six billion euros. In this case we would be talking about almost ten times that.”
He said he hoped job losses could be avoided but noted that trade between Europe and the United States made up around one third of total global trade.
“You can imagine that if we go down with a cold in the German-American or European-American relationship, many others around us will get pneumonia so it’s highly risky and that’s why we need to end this conflict as quickly as possible.”
Eric Schweitzer, president of the DIHK Chambers of Commerce, told Welt am Sonntag the German economy had for decades counted on open markets and a reliable global trading system but added: “Every day German companies feel the transatlantic rift getting wider.”