France on Tuesday asked its European partners to agree on curbing international funding of states that provide tax shelters, following the huge leak of documents showing the tax affairs of the rich and famous.
Finance Minister Bruno Le Maire, ahead of a meeting of European Union peers, called for a “credible” blacklist to be drawn up of tax havens and for sanctions for those who do not cooperate.
Talks on a blacklist initially planned for December were brought forward by the EU ministers after media reports citing the “Paradise Papers”, a trove of financial reports leaked mostly from Appleby, a prominent offshore law firm.
Though tax avoidance is legal in many circumstances, the papers have dragged in famous names, including Queen Elizabeth.
The documents were obtained by Germany’s Sueddeutsche Zeitung newspaper and shared with the International Consortium of Investigative Journalists (ICIJ) and some media outlets. Reuters has not independently verified them.
Le Maire called for the EU to look at the funding of countries that provide shelter.
“We are thinking, for instance, about the possibility of cutting financial support of the international institutions like the IMF (International Monetary Fund) or the World Bank on the states that would not provide the needed information on tax,” he told reporters before the meeting of EU finance ministers in Brussels.
He said he would present these proposals to his EU counterparts on Tuesday.
The debate is part of a new EU effort to contrast tax havens, as ministers consider setting up an EU blacklist of offshore jurisdictions that do not cooperate on tax matters.
The EU has been working for more than a year on the common blacklist that would replace largely toothless national lists. The European Commission, the EU’s executive arm, has called for sanctions for countries in the list, without giving details on the possible measures.
But some states remain cautious about the project.
Luxembourg’s Finance Minister Pierre Gramegna said on Tuesday that blacklisting countries “is always a difficult exercise” and stressed all EU countries needed to agree on the plan. Other EU tax reforms have collapsed in past years because of opposition from some member states.
Le Maire said an existing list of tax havens compiled by the Organisation for Economic Cooperation and Development (OECD), a global group of mostly rich nations, was not enough to counter tax avoidance.
The OECD list currently includes only Trinidad and Tobago. By contrast, the European Commission is currently screening about 50 countries that may not respect EU criteria on tax cooperation.
The final number is likely to be much lower than that if an EU blacklist were agreed, officials said.
Many of Britain’s Crown Dependencies and Overseas Territories, such as Guernsey and Bermuda, were subject to an initial screening by the EU Commission of 81 countries and jurisdictions deemed at risk of breeching EU criteria on tax transparency.
The inclusion of these territories in an EU blacklist may further complicate relations with Britain, as the country negotiates its divorce from the EU.