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How are nations influenced by being incorporated into blacklist of tax havens?

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Zubair Yaqoob
The author has diversified experience in investigative journalism. He is Chief content editor at wnobserver.com
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EU governments have been actively lobbying against tax evasion and tax havens, the last of which has been adopted by European Union governments in a new black list of havens or so-called “tax camps” that include a wide range of regions and countries to be included in tax havens, settled at ongoing meetings in Brussels to add 10 new countries to the black list.

Tax havens shelter $ 32 trillion outside tax

Tax havens allow easy establishment of companies with fake names and opening secret bank accounts. These investments are not subject to any taxes and some are subject to low taxes. Many major international companies prefer to move their headquarters to one of the tax havens so that the company avoids paying taxes. The transfer of profits to its branches in tax havens and the transfer of losses to the headquarters of the countries in taxable countries, which caused the major countries to lose a lot of the tax funds that were supposed to be paid by these companies to their governments, in favor of tax shelters to escape the illiteracy For both resulting from legitimate operations or illegal acts such as money laundering and illicit trade.

The Tax Justice Network estimates the volume of private non-taxable private wealth around the world at about $ 32 trillion, and uses secret havens to attract legitimate and illegal financial flows.

What is black list of tax havens? When did it appear?

NBFI

In April 2016, the world woke up to the publication of the most famous investigation, “Panama Documents,” which revealed the details of secret documents leaked from the Panama law firm Mossack Fonseca, which has a banking system that makes it a tempting tax haven. A number of world-renowned politicians, heads of state, businessmen and athletes have evaded tax, mostly by setting up illegal tax havens.

As a result of the huge uproar caused by the publication of this investigation and the publication of another investigation called “Paradise Papers” also revealed more tax evasion of top world celebrities in tax havens, EU finance ministers have approved a “black list of tax havens” of 17 tax havens outside the EU The EU does not cooperate with the EU on taxes and its tax systems are not in line with the EU. Some 47 countries are listed as “gray” for countries that do not comply with EU standards but are committed to making changes to their tax systems in December 2017.

The black list of tax havens in its first form included three Arab countries out of the 17 countries – the United Arab Emirates, Bahrain and Tunisia – but this list has been modified for about a year with the addition of six sanctuaries. The two countries are blacklisted, which is one of the reasons for the big disagreement between the finance ministers in their current meetings expected to be resolved.

Romanian Finance Minister Eugene Orlando Teodorovic predicted postponement of the adoption of the list due to divisions among EU member states regarding the inclusion of some legal ranges, while French Finance Minister Bruno Le Maire said he wanted the EU governments to adopt an updated blacklist of tax havens during a meeting in Brussels.

How are nations influenced by their incorporation in the blacklist of Tax havens?

The inclusion of any country in the blacklist of the European Union, the state may carry multiple problems not only at the economic but also on political level, where it is difficult to get any assistance from the European Union, and its financial transactions more scrutiny.

Adil Ghaffar, senior tax consultant, explains to the “World News Observer” that the inclusion of any country on this list means that cross-border financial transactions of companies based in this country or have transactions with companies associated with them, makes them subject to considerable scrutiny by other countries, because the possibility of avoidance of taxation in this case it is incredible.

Adil said that any investments with countries listed in the blacklist will be placed under the “microscope” and careful examination of all financial transactions, and that the investor may hesitate to establish companies or conduct financial transactions with these countries under the scrutiny of large tax systems different transactions of these investments.

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