EU tax havens review a ‘total whitewash’ since Malta was allowed to ‘escape’

‘EU must hold European countries up to the same level of scrutiny as non-European countries,’ says international charity Oxfam


Tista’ taqra dan l-artiklu bil-Malti

International charity Oxfam has taken considerable exception to the European Union finance minister’s update of its list of tax havens, calling out the absurdity of leaving the two most culpable EU member states, Malta and Luxemburg, off the hook and off the blacklist.

EU finance ministers this week updated its list of tax havens to include the blacklisting of three more countries – Anguilla, Bahamas and Turks and Caicos – and the complete delisting of Bermuda and Tunisia.

Oxfam has been campaigning for tax equality for years given its alarming findings that two-thirds of all global offshore wealth, some $12 trillion, is stashed away in EU-related tax havens such as Malta, Luxemburg and Andorra.

On Tuesday it had harsh words for the tax haven criteria being applied by the EU, and for Malta’s corporate tax structure for offshore companies.

“The current list makes the EU a hypocrite as major tax havens in Europe like Malta and Luxembourg escape the list while countries outside Europe like Eswatini and Botswana risk being blacklisted,” Oxfam’s EU tax expert Chiara Putaturo said in a hard-hitting statement.

”How can anyone give this list any credibility? Bermuda is one of the world’s worst tax havens with its zero corporate tax rate. Yet, the EU took it off the list after it made a few woolly promises to reform.

‘Automatic free pass for EU tax havens’

“To add insult to injury, major European tax havens [such as Malta and Luxemburg] are not on the list because all EU countries receive an automatic free pass,” she observed.

Oxfam, which recently highlighted how taxes being lost on the billions secretly stashed away in Malta and other tax havens hold the potential end extreme world poverty twice over. The money missing through tax evasion being perpetrated in Malta and elsewhere, Oxfam contends, is double that required for every person in the world to be living above the $1.25-a-day ‘extreme poverty’ threshold.

“This is not a blacklist, it is a whitewash,” Putaturo accused the EU.

“Two years have passed since the EU agreed to strengthen the list and give it some teeth, but nothing has changed. The criteria remain woefully weak. While this list captured three zero-tax rate countries, it was not due to their tax rate, and they can easily be delisted again.

“The EU should automatically blacklist zero and low tax rate countries and hold European countries up to the same level of scrutiny as non-European countries.”

In Malta’s case, the European Commission in a recent report found that, “Malta is considered to offer a specific regime with a very low effective tax rate. As the nominal rate of corporate income tax is 35%, Malta does not score on Indicator 28 [nil corporate tax rate]. However, due to the full imputation system of taxation, the ‘real’ rate can go as low as approximately five per cent.

“This lower effective tax rate can be obtained if the taxpayer organises himself in a certain way, such as by having a group of a minimum of two companies (parent and subsidiary) that are resident in Malta.”

The EU has been attempting to bring Malta in line with taxation norms. But Malta, for many reasons, has a vested interest in retaining its offshore corporate structures, not least of which is the revenue Malta is raking from such companies. This practice is almost always to the detriment of those companies’ home countries, often Malta’s fellow EU member states, which are losing out on tax revenue that is instead going to Malta thanks to its attractive minimal rate of taxation.

Along such lines, Oxfam called for the imposition of stronger criteria for assessing tax havens. Putaturo said on Tuesday that, “Stronger criteria could stop the industrial levels of tax dodging by the world’s richest and corporates. Governments and ordinary people are facing the cost-of-living crisis.

“Ending tax havens could provide the much-needed hundreds of billions in revenue as the world’s super-rich would have to pay their fair share.”

In a December 2021 tax briefing, Oxfam underscored how Botswana, for example, risks being put on the EU blacklist for failing to comply with an OECD tax transparency standard.

“Yet, Malta does not comply with the same tax transparency requirements and is not at risk of suffering any consequence as EU countries do not have to comply with this criterion,” the charity observed.

Oxfam additionally noted how when an EU country is found to have a harmful tax practice or favour aggressive tax planning practices, there is almost no kind of visibility and public scrutiny. This, Oxfam, said “is very different from the EU tax havens list.  Applying the same standards and visibility in the EU as outside is essential to ensuring a coherent policy against tax havens”.

Oxfam is also lobbying hard for the EU to use economic analyses to identify harmful tax regimes.

In particular, Oxfam is asking the EU to consider whether flows of Foreign Direct Investments – foreign companies investing in a country, and passive income such as royalties, interest and dividend payments – are disproportionate compared to the country’s gross domestic product.

Oxfam said its review of the data between 2017 and 2019 found that five European countries – Malta, Cyprus, Ireland, Luxembourg and the Netherlands – had FDI levels and/or passive income that significantly exceeded their economic weight.

“This strongly indicates that these countries use aggressive tax practices to attract investments and income (acting as offshore centres) or to act as a conduit towards other offshore centres, usually zero or low tax jurisdictions.”


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1 month ago

Oxfam is a reputable institution which does a great deal of good work. However no-where in this article is any mention of the United Kingdom, especially the City, which is considered to be the biggest laundermat of all europe. and this is within Oxfam’s home territory.

at the end of the day, those who think they are holier than thou never look at the bigger picture in which some of the biggest EU countries produce arms used by terrorists, or finance the wars over natural resources in third world countries.

A. Fan
A. Fan
1 month ago
Reply to  concerned

Plenty of Matthew 7:5 to go around for everybody on this one, methinks…

Ernest Vella
Ernest Vella
1 month ago

I wouldnt trust anything that Oxfam says…..for the reason that it did not point out the City of London’s role in massive tax avoidance, every day.

Secondly, can Oxfam tell us why its paying above industry rates in salaries for its executives, 11 of whom earn eye watering figures.

Thirdly, how many sex scandals has Oxfam “killed” ? No naming and shaming in Haiti?

People in glasshouses should not throw stones

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