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France publishes list of tax havens: France is missing the point, says CCFD-Terre Solidaire
25 February 2010
Eurodad member CCFD-Terre Solidaire supports the start that the French government is making towards tackling tax havens: the government has announced that it will publish a list of tax havens, with specific sanctions -demonstrating that it is taking the issue seriously. Furthermore, the list will be revised every year. But the measures France is putting in place leave a lot to be desired.
France
lets the 'real' tax havens off the hook
The list that the Finance Minister will publish this week includes only 18 territories: it is the OECD's 'grey' list, which misses out Andorra, the Bahamas, Malaysia, Uruguay and Vanuatu.
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By listing only tax havens, the French government does not address regulatory havens- those which do not cooperate with foreign law, though the Financial Action Task Force (FTAF) has just disclosed another two blacklists. (Click here to read Global Financial Integrity's analysis of FATF's new lists)
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To be taken off the blacklist, a company only needs to sign a single information exchange agreement with France. Furthermore, the information exchange will not be automatic but on request, a model that has proven to be ineffective.
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More worryingly, dummy companies, trusts, etc. will not be affected, because most tax havens do not know who the beneficial owners of these companies are. In such cases it is even more difficult to use the upon request model of information exchange.
In sum, the French government focuses on the Caribbean and Pacific islands and ignores the real havens of dirty money- Switzerland, Luxembourg, the Cayman Islands, Jersey, Austria, Delaware, and Bermuda etc. Not one of the key 15 territories listed as opaque by the Tax Justice Network is mentioned on France's list.
The real culprits of tax havens get on with business as usual
From March 1st, French companies operating in blacklisted territories will see their transactions face higher taxes. In principle, this is a brave and helpful step towards enforcing change in tax havens. However, the list includes so many territories with little economic power on a global level, that the sanction will only have a small impact.
The sanction should barely affect French companies. According to recent research by Alternatives économiques, only 5 subsidiary companies will be affected, out of the 1500 affiliated companies listed in the French stock market which are registered in tax havens.
CCFD-Terre Solidaire advocates that the best measure against the pervasive practice of tax evasion by multinational companies is to enforce them to disclose their activities in each of the countries in which they operate, by modifying international accountancy laws imposed on all companies.
France is forgetting the real victims of tax havens: developing countries
Every year, tax havens cost the French government over € 100 billion. In the South, tax havens cause millions of deaths. Southern states are € 125 billion out of pocket due to tax evasion by multinational companies- 5 times the sum necessary to eradicate world poverty according to the UN. Developing countries have hardly benefited at all from measures put in place by the G20: of the 150 tax information exchange agreements signed since April 2009, only 8% have benefited emerging economies and none have benefited the Least Developed Countries.