Europe may be picking a fight with the United States of America even before President-Elect Trump takes office.
The Big Interview
The EU’s tax haven blacklist is taking shape, as the European Commission uses the momentum generated by the LuxLeaks and Panama Papers scandals. Tax Commissioner Pierre Moscovici did not rule out including the United States on the list, in an interview with EurActiv.com.
Pierre Moscovici has refused to rule out any country being condemned to the EU’s forthcoming tax haven blacklist, including the US, which will soon be led by President-elect Donald Trump
Trump was the first presidential candidate since Richard Nixon not to release his tax returns, offering up a litany of excuses that his accounts were “too complicated”, incomplete or that he couldn’t because he was still being audited. Before the event, Moscovici called the billionaire a “populist provocateur”.
The EU’s tax chief also outlined his vision for country-by-country reporting and his proposal for a Common Consolidated Tax Base.
Pierre Moscovici is European Commissioner for Economic and Financial Affairs, Taxation and Customs.
He spoke to EurActiv’s James Crisp at the Development Finance Institutions and the Responsible Tax Agenda event, hosted by Oxfam IBIS and the European Network on Debt and Development.
Could any country hypothetically end up on the EU’s tax blacklist? After all, we now have a US president in waiting who infamously refused to publish his tax returns. Could you envisage seeing the US on the list?
I’m not going to say who will be on the blacklist, because we are only just starting the process. I’ve already said that the purpose of the list is that no one is on it, so that standards are implemented before it comes to that.
But every country, potentially, has to fulfill the criteria. We didn’t start with a pre-list of member states, we started with the criteria.
The president-elect can consider himself warned then.
Well, he refused to give up any information and that didn’t change the outcome of the election. Strange country, where you can avoid any taxation.
It would be great to get him on the list!
I’m not promising that! We need some political adherence after all.
If a country is blacklisted, will that affect its ability to access development funds from, for example, the European Investment Bank (EIB)?
That’s a point that we have to discuss. The process has only just started, the first stage was establishing vigorous criteria and which are transparent of course. The discussion started in the ECOFIN council on Tuesday (8 November); it was quite positive. There are, of course, some tendencies there to be cautious, but my objective is that this list will exist before the end of 2017. I think that the EIB’s task is to contribute to the integration and balance the social cohesion of the EU. It is not independent like the ECB and it has to adhere to EU policy objectives, including fair and transparent taxation.
So the EIB has a role in setting an example?
Yes, it has a role in promoting implementation of tax standards. We are in close discussion with them, especially on the alignment of EIB policy with international developments in this area.
Country-by-country reporting, the new package, it’s not actually full country-by-country reporting, is it?
Well, it is, in that we have it among administrations. The next step that I am fighting for is public country-by-country reporting. We’ve gone for a pragmatic approach to this. To be clear, some colleagues in the Commission, for reasons I can’t understand, are against this transparency of CBCR. They were arguing that there could be a contradiction between investment and transparency and that this could damage the competitiveness of our firms, in the absence of reciprocity. This Commission is all about transparency, but it is also about competitiveness, growth and jobs.
But the banks already have that.
I know, I was the first, as finance minister of France, to propose a bill that established this publishing without any damage to the banking sector. That’s why I was more than comfortable arguing against claims of a contradiction. Finally, the whole Commission is in favour of this. We tried to build something that is pragmatic and shows the activities of multinationals operating inside the EU. It should also be there for their activities inside tax havens. We have asked for global data, considering that we do not have the capacity to legislate for the rest of the world.
I know it is not totally satisfactory for some MEPs or even you, but I think we have made tremendous progress. Optimistically, this is revolutionary for the EU, it will make us the only economic region in the world to implement this. If I had proposed more, I would have not had a chance of getting it approved.
As a Commissioner, when I am considering proposing a new tax, I always ask myself two things: first, should we do this? Second, is it feasible? We always try to find the most ambitious, possible compromise. If my proposals had disregarded any attempt to find consensus, then everyone would have been satisfied with just the proposals, but there would have been no outcome. I would prefer to give you results.
Your job is particularly difficult, because of the need for unanimity. Are there any countries that are making things particularly hard for you? You can spill the beans, you are among friends here…
I know now that any meeting, even one among friends, means I need to be careful. Thank you, social media! I’m not going to name them, but you know who the usual suspects are. But, to be fair, those usual suspects are sometimes in an agreeable mood and our traditionally supportive partners sometimes are less cooperative.
We are still eagerly anticipating the EU legislation on BEPS (base erosion and profit shifting). When can we expect to see it and how is it looking?
We are going to implement BEPS, all BEPS and more than BEPS. And it is going to be now. The Dutch Presidency adopted our proposal on the ant-tax-avoidance directive, which is going to be implemented inside the EU, but its positions are also going to be implemented in other countries. That’s why I am, as you know, proposing another project: the Common Consolidated Tax Base. Within that framework, we are going to extend BEPS plus, as we call it, to the rest of the world. We have good momentum at the moment, so we have to take advantage. What I fear, is that the momentum vanishes and that the traditional behaviours of some member states, or even all of them, could reemerge. That’s why we have to work together.
Who is Pierre Moscovici?
Here is the latest EC statement on its Tax Haven Blacklist by Pierre Moscovici,European Commissioner for Economic and Financial Affairs, Taxation and Customs. Previously he served as a senior Frenchpolitician, as Minister of Finance from 2012 to 2014 and as Minister for European Affairs between 1997 and 2002.
Previously a member of the Trotskyist group the Revolutionary Communist League, Moscovici joined the French Socialist Party (PS) in 1984 and has since that time been a member of the Departmental Council of Doubs and of the French and European Parliaments. He has been National Secretary of his party since 1995.
Need more analysis on the EU tax haven blacklist? click here