Business Irish

Saturday 24 August 2019

Facebook, Starbucks to be quizzed as EU ponders tax haven blacklist

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Getty Images

Niall O'Connor, Shona Murray and Sarah Collins

Multinational giants, including Facebook, Google and Starbucks, are to be hauled before the Dáil's Spending Watchdog to discuss revelations contained in the 'Paradise Papers'.

The Revenue Commissioners are also due to examine the leaked documents, which detail how the rich and famous have reportedly used offshore tax havens to channel funds.

European Union finance ministers, including Paschal Donohoe, will today discuss proposals to set up a blacklist of tax havens as the fallout from the massive leak of files continues.

"It's time that we agree and publish a blacklist on tax havens," EU tax commissioner Pierre Moscovici told reporters, calling for a "credible" list and "adequate sanctions" when serious breaches are unveiled.

It was also confirmed yesterday that the Revenue Commissioners will examine the documents, which have also pointed to links between Bank of Ireland and Allied Irish Bank (AIB) and the law firm at the centre of the papers.

Taoiseach Leo Varadkar yesterday said the issue of tax avoidance is an international one and should be dealt with by the OECD.

Taoiseach Leo Varadkar. Photo: Frank McGrath
Taoiseach Leo Varadkar. Photo: Frank McGrath

"The OECD has said that Ireland is one of only 22 countries in the world out of nearly 200 that is fully compliant with tax transparency," Mr Varadkar said.

He hinted that the papers will not change Ireland's opposition to a clampdown on our low corporate tax rate or the way multinationals are taxed in Ireland.

"First of all, we believe in tax sovereignty. Nation states set their taxes to fund national budgets - national taxes for national budgets. That's what we want. We also want transparency too.

"We're signed up fully to the OECD process. So yes, we're for tax transparency, but we're also for tax sovereignty. That means us setting our tax rates and not other countries," he said.

"We will absolutely support tax transparency internationally and we'll do that through the OECD and at the same time at the European level we will absolutely defend our tax sovereignty."

Last night, the chairman of the Public Accounts Committee (PAC), Seán Fleming, confirmed that he intends to invite major multinational companies to appear to discuss their tax arrangements.

Such a move would be unprecedented, but Mr Fleming insisted that the PAC's remit covers the issue of tax collection.

Mr Fleming, a Fianna Fáil TD, cited Google, Facebook, Apple and Starbucks as firms that he intends to invite in.

"And I would expect that they would accept the invitation," he told the Irish Independent.

The proposal is due to be discussed by the PAC this week.

While the 'Paradise Papers' appear to involve tax avoidance, which is lawful, a spokeswoman for Revenue said it would also be on the look out for tax evasion.

"Revenue will, as always, strive to obtain in full any emerging information in relation to suspected tax evasion, including offshore tax evasion, and will use such information in the most efficient and effective manner," the spokeswoman said.

Speaking in Brussels, Mr Donohoe indicated that he expects a blacklist of tax havens will be agreed.

"Ireland will be one of the first countries to engage in the practice where our Revenue Commissioner will be able to share information with tax authorities in other jurisdictions to ensure assets or income is not being held in such a way to reduce their ability to pay tax," Mr Donohoe said.

EU countries had planned for months to reach an agreement on a blacklist for tax havens by the end of this year. The new revelations prompted the discussion to be brought forward, EU officials said, but no final decision was expected today.

The EU has discussed several measures to crack down on tax avoidance, including in the wake of the 'Panama Papers', a release by the International Consortium of Investigative Journalists (ICIJ) last year which chronicled a shadowy world of offshore holdings and hidden wealth.

Measures proposed by the European Commission include an EU-wide list of tax havens meant to discourage the re-routing of profits made in the EU to tax-free or low-tax countries, like Panama or Bermuda.

At the moment, each EU state has its own list of jurisdictions that are seen as less cooperative on tax matters. Criteria to define a tax haven vary greatly among EU states and some of them omit any jurisdictions in their national blacklists.

Irish Independent

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