Call for Europe to widen tax haven net to include EU culprits

Oxfam activists stage a satirical street-play mimicking wealthy people hidding their money in tax haven, in this December 5, 2017 photo, near the European institutions in Brussels, within a meeting of European Union ministers over a credible blacklist of non-EU tax havens. (AFP)
Updated 13 December 2017

Call for Europe to widen tax haven net to include EU culprits

LONDON: The EU is coming under mounting pressure to include countries within the bloc in its global crackdown on tax havens.
In the European Parliament, the Socialists and Democrats group has tabled an amendment demanding that Luxembourg, the Netherlands, Ireland and Malta — all EU members — should be written into the EU tax haven list.
Richard Murphy of Tax Research told Arab News: “There is plenty of evidence to suggest there are companies in those countries that have no economic substance and are established for tax purposes only.”
He added: “If we want to fight tax avoidance credibly on a global stage, we must also put our own house in order. Why should we care less about states inside of our union that have turned stealing our taxes into their business model?” The UAE, Bahrain and Tunisia were among 17 countries named as facing sanctions following the EU probe. But critics have said the list is undermined by being too selective and turning a blind eye to a number of other countries that should also have been penalized.
The UAE issued a strongly-worded statement saying it was surprised to be included in the list and had “worked transparently with European Union counterparts to ensure that we meet the criteria laid down by European Union Member States.”
Peter Simon, on behalf of the Socialists and Democrats group in the European Parliament, said according to the most recent OECD data on foreign direct investment, Luxembourg and the Netherlands together have more inward investment than the US, “and that the vast majority of these investments are in special-purpose entities with no substantial economic activity.”
He pointed out that of all the corporate investments ending up in tax havens, a total of 23 percent passed through the Netherlands, according to research by the University of Amsterdam.
Simon said the data provided clear indication that EU member states were “facilitating excessive profit-shifting activities, which comes at the expense of other European member states.”
“We therefore call on the European Commission to regard Luxembourg, the Netherlands, Ireland and Malta as EU tax havens.”
Murphy said: “I support the call. These places all deserve that status in their own right and it is good to see there are some politicians who are willing to stand up and say so.”
The EU’s original blacklist of tax havens —  which included South Korea, St. Lucia and Barbados — was published on Dec. 5, 2017.
It also put 47 countries on a so-called “grey list” as they had promised to change their tax rules to meet EU standards; these included Hong Kong, Jersey, Bermuda and the Cayman Islands, as well as Switzerland and Turkey.


Group behind Facebook’s Libra coin announces 21 founding members

Updated 6 min 5 sec ago

Group behind Facebook’s Libra coin announces 21 founding members

  • Planned Libra global currency faces swelling criticism from regulators
  • Group of Seven warned it poses a threat to the global financial system

GENEVA: The Libra Association, created by Facebook to launch its new cryptocurrency, has announced its 21 founding members after defections by previous supporters including Visa and Mastercard.
The announcement on Monday came as the planned Libra global currency faces swelling criticism from regulators, and reported warnings from the Group of Seven that it poses a threat to the global financial system.
The group kicked off its first council meeting in Geneva and founding members including Uber, Spotify and Vodafone formally signed onto the Libra Charter, director general Bertrand Perez said.
“We now have a total guarantee of their involvement, so we have confidence in the project,” he said.
Last month, the non-profit association voiced hope that the number of companies backing it when it opened for business would swell from an initial 28 to “well over 100.”
But instead the list has shrunk, after more of its initial backers walked away amid swelling criticism from regulators around the world.
Credit card giants Visa and Mastercard, online marketplace eBay and digital payments firm Stripe each announced Friday they had changed their minds about being founding members of the association, following a similar recent announcement by digital payments firm PayPal.
The Libra Association confirmed Friday that the companies would no longer be founding members, but said it would continue building an alliance of businesses, social-good organizations, and others to implement the cryptocurrency.
Its launch was originally planned for mid-2020, but Perez said he had not ruled out a later start date.
“What we want is to build a platform that is solid, that is there to last and that will survive in the long term,” he said, adding he was still “optimistic” about reaching around 100 members as planned.
The membership departures came after US senators sent letters to several financial firms noting that they could face “a high level of scrutiny from regulators” if they participated in the new currency plan.
French economy and finance minister Bruno Le Maire had warned that under current circumstances, Libra posed a threat to the “monetary sovereignty” of governments and could not be authorized in Europe.
Facebook executives have, however, claimed the new digital coin could help lower costs for global money transfers and help those without access to the banking system.
Facebook chief Mark Zuckerberg is set to testify at an October 23 hearing in the US House of Representatives on the Libra plan.
But in a fresh blow, a draft G7 report has outlined nine major risks posed by such digital currencies, according to the BBC.
The report, due to be presented to finance ministers at International Monetary Fund’s annual meeting this week, did not single out Libra but referred to “global stablecoins” with the potential to “scale rapidly” as posing a range of potential problems.
Stablecoins are seen as more steady than cryptocurrencies like Bitcoin, since they are pegged to traditional currencies such as the US dollar or the euro.
But the G7 draft report reportedly cautioned that such currencies could pose problems for policymakers setting interest rates, and could threaten financial stability if users suddenly suffer “loss of confidence” in the digital unit.
Randal Quarles, the head of the Financial Stability Board (FSB), which oversees regulation among G20 economies, also sent a letter to G20 finance ministers Sunday warning that “global stablecoins could pose a host of challenges to the regulatory community.”
This, he wrote, was “not least because they have the potential to become systemically important, including through the substitution of domestic currencies.”
“Stablecoin projects of potentially global reach and magnitude must meet the highest regulatory standards and be subject to prudential supervision and oversight,” he insisted.