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HONG
KONG is most upset at being named as one
of the top 30 non co-operative jurisdictions
by the European Commission because it is
not doing enough to fight tax avoidance,
But
Hong Kong says it has done its bit. It is
a member in good standing of the Global
Forum on Transparency and Exchange of Information
for Tax Purposes (the Global Forum). It
underwent a two-phase peer review by the
Global Forum. Both Phase 1 and Phase 2 reviews
(completed in 2011 and 2013 respectively)
have duly recognised Hong Kong's commitment
to meeting the international standard on
tax transparency.
"Hong
Kong has all along been supportive of international
efforts to enhance tax transparency and
combat tax evasion. We strongly disagree
with any allegation that Hong Kong is a
'non-cooperative tax jurisdiction', which
is totally unfounded," a Government
spokesman said.
The
blacklist of the world's 30 worst-offending
tax havens includes Hong Kong, but not Luxembourg,
the EU's high time tax avoidance hub.
There
are the usual suspects, of course: Cayman
Islands, British Virgin Islands and Guernsey
- but other jurisdictions that are commonly
labelled as offshore tax avoidance hubs
were notably missing. Jersey and Switzerland,
for example, were not named.
Within
Europe, Monaco, Lichtenstein and Andorra
made it onto the blacklist. The commission
explained, however, that the list of 30
"non-cooperative jurisdictions"
was designed only to assess non-EU members.
As a result, the new register does not include
countries such as the Netherlands, Ireland
or Luxembourg - all of which are under investigation
by the European competition authorities,
suspected of offering "sweetheart"
tax deals to multinationals.
The
industrial scale on which Luxembourg - one
of the richest per capita countries in the
world - was facilitating the tax avoidance
ploys of large corporations was laid bare
last year in the LuxLeaks scandal.
Six
of the 30 tax havens named by the commission
were British overseas territories - Anguilla,
Bermuda, British Virgin Islands, Cayman
Islands, Montserrat, and the Turks and Caicos
Islands - but only one crown dependency,
Guernsey, made the list. Twenty-one were
small island economies, mostly in the Caribbean
Sea, Pacific Ocean or Indian Ocean.
Each
country on the blacklist had been suggested
by at least 10 EU member states as problematic.
The UK did not make any suggestions, nor
did Germany.
Brussels
hopes the list will help member states put
pressure on commonly recognised pariah jurisdictions.
The
register was announced alongside more substantive
plans for reforming the way in which multinationals
are taxed across the EU, a framework proposal
known as the common consolidated corporate
tax base, or CCCTB.
Pierre
Moscovici, European commissioner with responsibility
for tax, said: "Our current approach
to corporate taxation no longer fits today's
reality. We are using outdated tools and
unilateral measures to respond to the challenges
of a digitalised, globalised economy."
The
CCCTB measure will look to harmonise corporate
income tax rules among member states in
a further effort to combat aggressive tax
avoidance. As expected, Mr Moscovici conceded
that - in the first instance at least -
the controversial "consolidated"
element of the tax reforms would have to
be delayed.
His
compromise plan seeks to find common ground
for the tax treatment of multinationals,
making it harder for corporations to build
complex structures and transactions between
member states that artificially depress
tax liabilities.
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