Oxfam Ireland Reaction to EU Finance Meeting

Oxfam Ireland Reaction to EU Finance Meeting

LIMITED EU REFORM ALLOWS IRELAND’S HARMFUL TAX REGIMES OFF THE HOOK

8 November 2022

Today, EU finance ministers agreed on the reform of the mandate of the Code of Conduct Group, the body within the Council of the EU that assesses harmful tax regimes and is responsible for the EU tax haven list. This reform updated the definition of harmful tax regimes in EU countries. No progress was made on updating the criteria for the EU tax haven list.

The EU has repeatedly criticised Ireland’s use of harmful tax regimes that allow multinational companies in Ireland avoid tax. In 2020, the European Commission identified Ireland as one of six EU member states that have tax rules or systems that facilitate aggressive tax avoidance.

Reacting to the news, Michael McCarthy Flynn, Oxfam Ireland Head of Policy and Advocacy, said;

“This reform is a slight improvement on the definition of harmful corporate tax regimes. It is broader and will close an important loophole used by companies to dodge paying tax. Yet, the definition remains vague, and only applies in the EU and to new national tax regimes. The process still lacks transparency.

“EU countries must follow up with more stringent guidelines and include all harmful tax regimes, such as patent boxes. Without that, the reform risks becoming another toothless attempt to clamp down on tax havens in Europe.

“We are still waiting on the promise to reform the criteria governing the EU tax haven list.”

ENDS

Notes to editors:

  • In 2019 the European Parliament called on the Commission to regard at least five Member States - Cyprus, Ireland, Luxembourg, Malta and the Netherlands - as EU tax havens.
  • In 2020, the European Commission identified six member states - Cyprus, Hungary, Ireland, Luxembourg, Malta and the Netherlands - as having tax rules or systems that facilitate aggressive tax planning.
  • Oxfam showed that for three consecutive years, five EU member states, Cyprus, Ireland, Luxembourg, Malta and the Netherlands, had economic indicators typical of tax havens (e.g. high levels of Foreign Direct Investment, intellectual property payments, interests, dividends).
  • In July 2020, the European Commission said it would reform the mandate of the Code of Conduct Group (CoCG) - including the definition of harmful tax regimes and the criteria governing the EU tax havens list. Today, EU countries reached an agreement on the definition which was blocked by Hungary and Estonia last December. No progress has been made on the reform to the criteria of the EU tax havens list.
  • The reform:
    • Introduces a broader definition of harmful tax practices as it includes the screening of all harmful tax regimes used by companies to avoid taxes in the EU. Until now, countries could bypass this screening if they set out rules allowing all companies to benefit from tax advantages rather than only including specific sectors;
    • Only applies to general regimes adopted or modified after 2023; and
    • Gives the European Commission the possibility to address requests on harmful tax regimes to EU countries. 
  • Oxfam has consistently criticised the Code of Conduct Group for the weak and unfair criteria used to assess harmful tax regimes in the EU and in blacklisted countries, and for the lack of transparency in the screening process. We call for a stronger definition and assessment of harmful tax regimes and for more transparency and accountability of the group. Read our 2019 briefing note, Off the Hook and our tax briefing to the French presidency of the EU.  Similar recommendations were put forward in a report by the European Parliament in October 2021.
  • Oxfam showed that for three consecutive years, five EU countries (Cyprus, Ireland, Luxembourg, Malta and the Netherlands) had economic indicators typical of tax havens (e.g. high levels of Foreign Direct Investment, intellectual property payments, interests, dividends).
  • Aggressive corporate tax planning in the EU amounts to 50 - 190 billion euros according to EU studies. A recent study by UNU-WIDER estimated that 1 trillion US dollars (40 percent of global corporate profits) was shifted to tax havens in 2019.

Contact information: Clare Cronin, Oxfam Ireland, 353+87+1952551

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