24 Oct The Chair of the Council finally spoke at the TAX3 Committee
Fabrizia Lapecorella, Chair of the Code of Conduct Group on Business Taxation (CoCG), finally attended an Exchange of Views with the TAX3 Special Committee on 10th October having been invited but rejected previous invitations on the basis of not having a mandate from the CoCG to participate – the mandate was granted and communicated by the Council of the European Union on June 8 this year – and also diary conflicts .
GUE/NGL’s MEP speaking at the meeting was Matt Carthy (Sinn Féin) who commented on the lack of transparency of the CoCG and the lack of sincere cooperation with the European Parliament.
Carthy also expressed GUE/NGL’s concerns over the lack of transparency regarding the process of creating and modifying the tax haven blacklist, and noted that the outcome of this process is completely unsatisfactory as most of the world’s worst tax havens aren’t actually on the list. Moreover, Carthy criticised the lack of transparency regarding the criteria used to remove 20 countries from the list of 92 at the beginning of the listing process, including the US.
It should be noted that the US is widely known for having harmful tax regimes in states like Delaware, and for not cooperating in the automatic exchange of information, i.e. the Common Reporting Standards (CRS).
Carthy also asked Ms Lapecorella if “…given the role of Britain in pushing for even less restrictions on patent boxes, has there been any discussion on a change in the EU’s approach to patent boxes in a post-Brexit scenario? Has there been, for example, any discussion among the Code of Conduct Group about developing guidelines on patent boxes that are stricter than the OECD’s or of shutting down patent boxes altogether?”
Fabrizia Lapecorella, replied, regarding the modified nexus approach and post-Brexit, that at the moment she does not envisage that there will be any consequences, “…because the modified nexus approach that has been used as the basis for examining IP regimes by the Code of Conduct is the approach that was already agreed at international level…”
It is worth noting in this respect that such agreement has only been made in the context of the OECD / G20 BEPS Action Plan, and not ‘internationally’ as developing countries were not involved in setting such standards. Most important of all is the ‘nexus’ test that requires companies to introduce a ‘track and trace’ procedure to prove their expenditures. But this will presumably be checked only by the country providing the tax break, as was pointed out by Alex Cobham for Tax Justice Network back in July 2015. Also, Ms Lapecorella highlighted in her reply the role of the Global Forum for Tax Practices when such forum operates in total secrecy and has proved to be as inefficient as the CoCG!
Regarding the removal of the 20 countries at the beginning of the listing process, the Chair of the COCG replied as evasively as she had done before to other political groups in the same meeting, saying that the COCG had published the procedure that their experts, had used for the screening exercise. However, such publications, as the one of the Council of the European Union of June 8, does not explain the reasons for not listing these countries.
Fabrizia Lapecorella has therefore once again failed to provide a proper answer as to what criteria the US was allowed to be excluded from the list when it has jurisdictions that are considered by the European Commission on its scoreboard as harmful.
Watch Matt Carthy’s exchange of views with Fabrizia Lapecorella underneath: