Tuesday 1 December, 2020

Study finds EU blacklisted countries cause less than 2% of tax losses

"EU blacklisted jurisdictions cause less than 2 per cent of global tax losses while EU member states cause 36 per cent."

This is according to the findings of an annual study released yesterday by global advocacy group, The Tax Justice Network (TJN).

Adopted in 2017, the EU blacklist is used by member states of the European Union to address what it deems as external risks of tax abuse and unfair tax competition. The screening process does not include EU member countries.

The EU blacklist, as of October 2020, comprises the following twelve jurisdictions, four of which are Caribbean countries: American Samoa, Anguilla, Barbados, Fiji, Guam, Palau, Panama, Samoa, Seychelles, Trinidad and Tobago, US Virgin Islands, Vanuatu.

The State of Tax Justice 2020 reveals that two jurisdictions blacklisted by the EU: Palau and Trinidad and Tobago, "while non-cooperative with international tax regulations, did not create any observable tax losses for other countries."

TJN's analysis of the jurisdictions on the EU tax haven blacklist found EU blacklisted countries to be collectively responsible for just 1.72 per cent of global tax losses, costing countries over $7 billion in lost taxes per year.

In comparison, EU member states were found to be responsible for 36 per cent of global tax losses, costing countries over $154 billion in lost taxes every year.

Top Caribbean economist, Marla Dukharan has argued against the indisputable power dynamics inherent in the blacklisting of "certain hapless non-EU members" for non-compliance with its "code of conduct and ever-changing tax-related requirements," referring to them acts of racism and bullying.

"We have to ask ourselves the question, are EU member states held to the same standards to which they are holding Cayman and other jurisdictions? Do they even hold non-EU states, such as the UK or the US to the same standards? The answer is no," says Dukharan.

According to the TJN report, higher income countries are responsible for 98 per cent of countries’ tax losses, costing countries around the world over $419 billion in lost tax every year while lower income countries are responsible for just 2 per cent, costing countries over $8 billion in lost tax every year.

Among the top offenders identified in the TJN report were high income countries such as the United Kingdom (10 per cent; over $42 billion), the Netherlands (8.5 per cent; over $36 billion), Luxembourg (6.5 per cent; over $27 billion) and the US (5.53 per cent; over $23 billion).

"They need the big countries like the UK and the US so they won’t put this kind of pressure on them, but they will happily put this kind of pressure on us because they don’t need us and we are their competition," says Dukharan.

The report, entitled "The State of Tax Justice 2020" is, according to its authors, the first study to reveal the extent of resources being lost.

Economist, Marla Dukharan

Economist, Marla Dukharan

Get the latest local and international news straight to your mobile phone for free: