Towards fairer corporate taxation: Will the measures do the job in third countries?

 

Tax optimisation is widely practiced among large corporations and high-wealth individuals. These practices were relatively unknown to the public until the past few years, with the disclosure of questionable tax structures in the Lux Leaks, Panama Papers, Offshore Leaks, Swiss Leaks, etc. These revelations have led to a paradigm shift in the battle against money laundering, tax avoidance and tax evasion. The ongoing reforms and in particular the measures addressing the use of offshore jurisdictions to shelter income from taxation was debated during a CEPS lunchtime meeting on February 1st.  At global level the G20 and OECD’s base erosion and profit shifting (BEPS) agenda forms the main initiative to enhance the fairness and efficiency of tax collection. In addition, the European Commission, represented at the event by Emer Traynor (Deputy Head of Unit, DG TAXUD), has also taken initiatives to enhance transparency and effectiveness, including the compilation of a list of non-cooperative jurisdictions. MEP Paul Tang sees the latter as a good initiative, but doubts whether it will serve as an effective threat. Minister Wayne Panton of the Cayman Islands stressed the importance to assess jurisdictions individually, looking at the local specificities. In his view, Cayman should not appear on this list despite its tax system based on indirect taxes, since it has implemented all the international standards. Richard Bolwijn from UNCTAD stressed the importance of not just looking at direct taxes. He noted, moreover, that the impact on investment flows should be assessed, which are crucially important for developing countries.