EU pushes for tax blacklist after Paradise Papers leak

Alex Pigman with Katy Lee, Agence France Presse

Posted at Nov 08 2017 01:15 AM

BRUSSELS - The EU on Tuesday pushed for Europe to draw up a blacklist of tax havens after the "Paradise Papers" revealed loopholes used by Apple and Nike as well as celebrities such as Formula One champion Lewis Hamilton.

While seeking to minimize taxes is not necessarily illegal, revelations from the 13.4 million leaked documents, released since the weekend through international media, have already proved embarrassing to figures as diverse as U2 singer Bono and Queen Elizabeth II.

US tech giant Apple is the latest company to become embroiled in the leak, with the documents exposing how the iPhone maker shifted profits from one haven to another to minimize taxes.

Apple used offshore law firm Appleby to move tens of billions of dollars from low-tax Ireland to Britain's Channel Islands when Dublin began tightening its tax laws in 2015, according to documents cited by the New York Times and BBC.

But Apple said shifting the funds to the island of Jersey, which is largely exempt from EU tax regulations, did not save it any money.

The leaks -- which add to revelations about how the global elite manage their money from the Panama Papers and LuxLeaks scandal -- were center-stage at a meeting of EU finance ministers in Brussels on Tuesday.

The EU move follows similar efforts, notably by the Organisation of Economic Cooperation and Development, which maintains a list of "uncooperative tax havens".

EU countries have struggled for over a year to finalise a list of non-EU tax havens, with low-tax smaller nations such as Ireland, Malta and Luxembourg reluctant to scare companies away.

But EU Economic Affairs Commissioner Pierre Moscovici, who is leading the blacklist effort, said Tuesday he wants it in place by the end of the year.

"It is important that this list comes out," he said. "It must be credible and up to the challenge."

Sources said EU officials have warned about 60 countries that their tax policies may be at risk of blacklisting, demanding further information before November 18.


At a 2013 US congressional hearing, Apple chief Tim Cook denied the use of "gimmicks" to avoid taxes. 

The company is now facing EU demands for about $14.5 billion (12.5 billion euros) in taxes based on a ruling that its Irish tax structure amounted to illegal state aid.

In Britain, the BBC and the Guardian newspaper reported that Hamilton avoided paying taxes on his private jet using an elaborate scheme now under investigation by tax authorities.

Documents showed the driver received a £3.3 million ($4.4 million, 3.7 million euros) tax refund in 2013 after his luxury plane was imported into the Isle of Man, a low-tax British dependency.

Hamilton's representatives could not be reached by AFP for comment.

A separate report in French daily Le Monde said sportswear giant Nike used a Dutch loophole to reduce its tax rate in Europe to just two percent compared with a 25 percent average for European companies.

Nike, which says it acted legally, managed to save taxes by using an offshore subsidiary which charged royalties to the company's European subsidiaries, the report said.


Separately, the documents showed US Commerce Secretary Wilbur Ross had a 31 percent stake in shipping firm Navigator Holdings, a partnership with Russian energy giant Sibur.

That company is partially owned by Vladimir Putin's son-in-law Kirill Shamalov and Gennady Timchenko, the Russian president's friend and business partner who is subject to US sanctions.

The cabinet member's ties to Russian entities raise questions over potential conflicts of interest, and whether they undermine sanctions on Moscow over the war in Ukraine.

Ross denied any wrongdoing, telling Bloomberg he had already been planning to sell his stake, while Russian politicians stressed that the deals were legal.

Irish singer Bono, meanwhile -- an ardent anti-poverty campaigner -- said he was "distressed" by documents showing he invested in a Lithuanian shopping center which may have broken tax rules.

Earlier reports highlighted offshore holdings of Britain's Queen Elizabeth II and a senior advisor to Canada's Prime Minister Justin Trudeau.

Some £10 million of the queen's private money was placed in funds held in the Cayman Islands and Bermuda. Her estate stressed that her investments were "fully audited and legitimate".

Trudeau's top fundraiser Stephen Bronfman, heir to the Seagram fortune, was shown to have moved about $60 million to offshore tax havens with ex-senator Leo Kolber.

The so-called Paradise Papers documents, mainly from law firm Appleby, were first obtained by Germany's Suddeutsche Zeitung newspaper.

They have since been shared with the US-based International Consortium of Investigative Journalists (ICIJ) and other media.