EU pushes for tax-haven blacklist
Leaked ‘Paradise Papers’ cause embarrassment for many high-profilers exploiting legal loopholes
THE European Union pushed for Europe to draw up a blacklist of tax havens after the “Paradise Papers” revealed loopholes used by Apple and Nike as well as celebrities such as Formula One champion Lewis Hamilton.
While seeking to minimise taxes is not necessarily illegal, revelations from the 13.4 million leaked documents, released since the weekend through international media, have already proved embarrassing to figures as diverse as U2 singer Bono and Queen Elizabeth.
US tech giant Apple is the latest company to become embroiled in the leak, with the documents exposing how the iPhone maker shifted profits from one haven to another to minimise taxes.
Apple used offshore law firm Appleby to move tens of billions of dollars from low-tax Ireland to Britain’s Channel Islands when Dublin began tightening its tax laws in 2015, according to documents cited by the New York Times and BBC.
But Apple said shifting the funds to the island of Jersey, which is largely exempt from EU tax regulations, did not save it any money.
The leaks – which add to revelations about how the global elite manage their money from the Panama Papers and LuxLeaks scandal – were centre-stage at a meeting of EU finance ministers in Brussels yesterday.
The EU move follows similar efforts, notably by the Organisation of Economic Cooperation and Development, which maintains a list of “uncooperative tax havens”.
EU countries have struggled for more than a year to finalise a list of non-EU tax havens, with low-tax smaller nations such as Ireland, Malta and Luxembourg reluctant to scare companies away.
But EU Economic Affairs Commissioner Pierre Moscovici, who is leading the blacklist effort, said yesterday he wanted it in place by the end of the year.
“It is important that this list comes out,” he said. “It must be credible and up to the challenge.”
Sources said EU officials had warned about 60 countries that their tax policies may be at risk of blacklisting, demanding further information before November 18.
At a 2013 US congressional hearing, Apple chief Tim Cook denied the use of gimmicks to avoid taxes. The company is now facing EU demands for about $14.5-billion (R206.2-billion) in taxes based on a ruling that its Irish tax structure amounted to illegal state aid.
In Britain, the BBC and The Guardian newspaper reported that Hamilton avoided paying taxes on his private jet using an elaborate scheme now under investigation by tax authorities.
Documents showed the driver received a £3.3-million (R61.7-million) tax refund in 2013 after his luxury plane was imported into the Isle of Man, a low-tax British dependency.
Hamilton’s representatives could not be reached for comment.
A separate report in French daily Le Monde said sportswear giant Nike used a Dutch loophole to reduce its tax rate in Europe to just 2% compared with a 25% average for European companies.
Nike, which says it acted legally, managed to save taxes by using an offshore subsidiary which charged royalties to the company’s European subsidiaries, the report said.
Separately, the documents showed US Commerce Secretary Wilbur Ross had a 31% stake in shipping firm Navigator Holdings, a partnership with Russian energy giant Sibur.
That company is partially owned by Vladimir Putin’s son-in-law, Kirill Shamalov, and Gennady Timchenko, the Russian president’s friend and business partner who is subject to US sanctions.
The cabinet member’s ties to Russian entities raise questions over potential conflicts of interest, and whether they undermine sanctions on Moscow over the war in Ukraine.
Ross denied any wrongdoing, telling Bloomberg he had already been planning to sell his stake, while Russian politicians stressed the deals were legal.
Irish singer Bono, meanwhile – an ardent anti-poverty campaigner – said he was distressed by documents showing he invested in a Lithuanian shopping centre which may have broken tax rules.
Reports highlighted offshore holdings of Britain’s Queen Elizabeth and a senior adviser to Canada’s Prime Minister Justin Trudeau.
Some £10-million (R187-million) of the queen’s private money was placed in funds held in the Cayman Islands and Bermuda. Her estate stressed that her investments were fully audited and legitimate.
Trudeau’s top fundraiser Stephen Bronfman, heir to the Seagram fortune, was shown to have moved about $60-million (R854-million) to offshore tax havens with ex-senator Leo Kolber.
The “Paradise Papers” documents, mainly from law firm Appleby, were first obtained by Germany’s Suddeutsche Zeitung newspaper. They have since been shared with the US-based International Consortium of Investigative Journalists (ICIJ) and other media.
Theresa May’s spokesman said the British prime minister “wants people to pay the tax they owe”, while cautioning that holding offshore investments was not an automatic sign of wrongdoing. – AFP