WRITTEN QUESTION E-1656/01

by Raimon Obiols i Germà (PSE) to the Council

(12 June 2001)

Subject: Harmful tax competition

The OECD has been working for some years now on the preparation of an international code to combat harmful tax competition, in a climate of growing consensus on the need to abolish tax havens, large-scale tax avoidance and money laundering. In this connection, in June 2000 a body linked to the OECD, the International Financial Action Group, called on over thirty countries to clarify their financial systems and published a list of fifteen especially uncooperative countries. This initiative was supported by the US Administration.

In May 2001 the new Treasury Secretary of the Bush Administration declared that this stance on tax havens was not in line with the new US Administration's tax and economic priorities, adding unequivocally that the United States does not support efforts to dictate to any country what its own tax rates or tax system should be, and will not participate in any initiative to harmonise world tax systems.

These declarations have, obviously, given rise to concern in large parts of the international community. There is widespread indignation existing at the fact that organised crime can, as things stand, finance itself unpunished at international level, coupled with anxiety that the new US Administration is, as it seems, rejecting the idea of cooperation in any initiative for global governance.

Given the above:

1. What action does the Council intend to take to ensure that the EU achieves positive results in its campaign against tax havens and money laundering?

2. Does the Council intend to make this a priority subject for the transatlantic agenda?

Reply

(6 December 2001)

The Council would first remind the Honourable Member that the Extraordinary European Council of 21 September 2001, taking as its premise the fact that a decisive aspect of the fight against terrorism is combating its funding and that energetic international action is required to ensure that the fight is fully effective, called upon the Ecofin and Justice and Home Affairs Councils to take the necessary measures to combat any form of financing for terrorist activities, in particular by adopting in the weeks to come the extension of the Directive on money laundering and the framework Decision on freezing assets. On 17 October 2000, meeting in its joint Economic and Financial Affairs/Justice and Home Affairs configuration, the Council reiterated the invitation of the Tampere European Council to the Member States to implement in full and also in their dependent territories the provisions of the money-laundering Directive, the 1990 Strasbourg Convention and the recommendations of the FATF on money laundering.

Furthermore, under the Code of Conduct for business taxation intended to eliminate harmful tax measures, the Member States have pledged to promote the adoption of the principles of the Code in third countries and territories to which the EC Treaty does not apply. In particular, those Member States which have associated or dependent territories, or responsibilities or fiscal prerogatives in other territories, have undertaken within the framework of their own constitutional provisions to ensure the application of the principles of the Code in such territories.

Lastly, as part of discussions on the proposal for a Directive on taxation of the savings income of non-residents and in conformity with the conclusions of the Feira European Council, the Presidency and the Commission have begun talks with the United States and the leading third countries (Switzerland, Liechtenstein, Monaco, Andorra, San Maríno) to encourage the adoption of equivalent measures in those countries; at the same time, the Member States concerned have begun discussions with those of their dependent or associated territories referred to in the Conclusions (the Channel Islands, the Isle of Man and the Caribbean dependent or associated territories) to ensure that those territories adopt measures identical to those which will apply within the Community.

The Council would also remind the Honourable Member of the Member States' commitment in the fight against harmful tax competition within the OECD.