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Bermuda angry at inclusion on tax haven blacklist
The European Commission (EC) has revived its aim for a common consolidated corporate tax base (CCCTB), as part of an action plan to make corporate business taxation in the European Union (EU) more efficient and growth-friendly.
The document from Brussels recommends a series of initiatives to tackle avoidance, secure sustainable revenues, and strengthen the single market for businesses.
The proposal for a mandatory CCCTB – which stalled following a proposition generated in 2011 – will be relaunched in 2016, with the EC believing it can improve the single market for businesses while closing opportunities for corporate avoidance.
The commission’s action plan also sets out a path for effective taxation in the EU, with companies paying a “fair share” in the country where they make their profits, through the closure of legislative loopholes, improvements to the transfer pricing system, and stricter rules for preferential tax regimes.
Tim Wach, global managing director of tax advice network Taxand, warned that the revival of a CCCTB will put international companies “under more pressure than ever to adapt to a rapidly evolving international tax system”, and would likely cause tax competition between EU member states to intensify.
As with a number of plans to increase harmonisation in tax policy, the CCCTB is fraught with political complexity and difficulties in implementation. It would also demand the support of 28 countries to reach approval”, said Wach.
The EC has also published a pan-EU list of countries and territories blacklisted by member states as tax havens, describing it as an “important first step towards creating a more cohesive… strategy towards non-cooperative tax jurisdictions”.
Bermuda is included on the list, which the territories’ minister of finance, Bob Richards, described as “unjustified and baseless”.
He claimed at least five of the 11 member states that nominated his homeland have “either not performed their obligation required to consummate a tax information exchange agreement with Bermuda, or failed to keep their promise made to Bermuda to amend their legislation to remove us from their [own] blacklist.”
