SEATINI and other Stakeholders Call for a more effective, accountable and coherent EU blacklist.

On 26th March 2021, SEATINI Uganda participated in a panel event on the European Union (EU) and the fight against tax havens that was organized by Oxfam International’s European Union Office. This panel event brought together critical voices directly engaged in the current review process of the EU list of tax havens (EU governments, European Parliament and European Commission) and civil society (activists and journalists) whose work has helped to break the opacity of corporate structures and showcase the impact of tax havens in our societies.

Tax havens are responsible for massive revenue losses of other countries. It is estimated that annually this amounts to over $427bn. Tax losses are equivalent to nearly 52 percent of the combined public health budgets in poor countries and it is 8 percent for rich countries. This money is needed now more than ever to recover from the COVID-19 crisis and build stronger health and social protection services. Peoples’ lives and livelihoods are at stake.

The EU created a tax havens list in 2017 building on a definition of harmful tax practices from 1997. The aim was to tackle the practice of big companies dodging their tax bills though tax havens. The strategy was to put pressure on countries that allow this practice encouraging blacklisted countries to change their tax rules. Today this list is outdated and civil society has showed its failure to identify real tax havens:
• Only two out of 31 countries with 0 or low corporate tax rate are blacklisted.
• None of the top 20 greatest enablers of corporate tax abuse are on the list.
• European countries are immune from scrutiny despite acting as tax havens as shown by the recent Openlux investigation.
Last year, the European Commission recognized that the process needs to be reformed and committed to update it. The European Parliament has also called for a better EU tax haven list.

While giving her presentation, Jane Nalunga, the Executive Director at SEATINI Uganda brought to light the fact that some of the listed top ten enablers of Corporate tax abuse are key investors in Africa; and have signed tax and investment treaties which have facilitated massive Illicit Financial Flows.

‘‘African countries are in dire need of resources. Yet these tax havens are providing a safe haven for illicit financial flows. These resources are urgently needed by governments especially during this COVID-19 period. There is a need therefore to address this vice through a UN Tax body,” said Jane Nalunga.

Bastian Obermayer, the Head of the Investigative Unit of Süddeutsche Zeitung and Panama Papers Reporter noted that every tax haven is causing invisible harm by letting tax money miraculously disappear, money that could be used for more hospitals, safer streets, better education and so much more.

Paul Tang, the Chair of the European Parliament’s Subcommittee on Tax Matters (FISC) and Member of the European Parliament noted that in setting up the list of tax havens, EU countries forgot one thing: actual tax havens.

Paul Tang also observed that currently only 2% of tax avoidance takes place through black-listed countries. 
Benjamin Angel, Director of Direct Taxation, Tax Coordination, Economic Analysis and Evaluation in DG TAXUD, European Commission emphasized that the EU listing process has been instrumental in helping promote tax good governance and fighting tax evasion and avoidance internationally.

‘‘We now need to look to the next steps, in particular reviewing the EU listing criteria, strengthening defensive measures and revising the geographical scope, to ensure that the EU list remains a relevant and useful tool as we move forward,” said Benjamin Angel.
On the other hand, Morten Bødskov, the Minister of Taxation, Denmark reiterated that the EU-blacklist of Tax Havens must be strengthened.

‘‘More relevant countries should undergo evaluation based on stricter criteria reflecting the highest international standards on tax transparency and fair taxation,” said Morten Bødskov.
Some of the key issues discussed include;
• The EU list is not catching the worst offenders;
• It is basic fairness that everyone needs to pay taxes;
• There is need to expand the geographical scope to capture actual tax havens;
• There is need to increase tax transparency;
• Ensure effective public country by country reporting.

SEATINI joins Oxfam International’s EU Office to call for a more effective, accountable and coherent EU blacklist.