The European Council on June 21, approved a new directive on anti-tax-avoidance, which it said would address "situations where corporate groups take advantage of disparities between national tax systems in order to reduce their overall tax liability."
EU misses key oppty to stop companies from shifting profits to tax havens: https://t.co/H8HWy1yxP8 #EndTaxHavens pic.twitter.com/Lxy0Cw847n
— Oxfam International (@Oxfam) 21 June 2016
However, Oxfam has criticized the reforms as being insufficient to prevent companies moving profits to tax havens. Oxfam International EU Policy Adviser on Inequality and Taxation, Aurore Chardonnet, told Sputnik:
"We have the impression that there is double discord among finance ministers. On the one hand, after the Panama Papers and other tax scandals, all the finance ministers of the EU made a commitment to take up the fight against tax avoidance.
"What do we see now? When they had the opportunity to come together and take some strong action against tax avoidance schemes, which is what they were supposed to do, we see that they have watered-down the proposals from the European Commission just to please some member states who are reluctant to reform their tax system because they benefit from those tax loopholes."
Luxembourg and Ireland are being investigated by the European Commission for allowing special tax arrangements. An example is Google, which makes use of the — perfectly legal — "Double Irish" arrangement that allows the company to use a system of payments between different company entities in different countries to lower its corporation tax liability.
Specifically, all Google transactions in the UK are invoiced from Google Ireland, where the tax regime is lower, so that — after charges between Google's UK and Ireland operations are taken into account — Google corporation tax liability in the UK is lowered.
UK-Linked Tax Havens
Despite UK Prime Minister David Cameron publicly demanding a crackdown on tax avoidance, many of the Crown dependencies of the United Kingdom — such as Jersey, Guernsey and the Isle of Man — and British Overseas Territories — including Bermuda, the Cayman Islands, the Turks and Caicos Islands, the British Virgin Islands and Gibraltar — remain secretive about the tax affairs of companies registered in their territories.
"We are calling on member states to implement stronger minimum standards. At least, they can improve tax transparency. There is now another proposal on the table, on country-by-country reporting, which means companies must disclose where their activities are and where they pay taxes. But so far, the proposal only applies to EU operations and we would like it to be extended to all operations around the world so we can see where the money goes," Chardonnet told Sputnik.
"To end the era of tax havens and the tax race to the bottom, we need straightforward and easy-to-implement rules that target companies' subsidiaries in tax havens. But finance ministers are making it impossible for tax administrations to implement such measures," she said.
