More nations and territories sign up to tax transparency scheme

25 Apr 16

Over twenty more nations will share details on the true owners of secretive companies after joining up to the anti-tax evasion initiative headed by Europe’s five largest economies.

British overseas territories and 19 European Union member states will participate in the automatic exchange of beneficial ownership information as part of the pilot scheme launched by the UK, Germany, France, Spain and Italy in the wake of the Panama Papers.

UK chancellor George Osborne said only a week after its launch, the initiative was gaining the international support needed to make it truly effective.

Countries from right across Europe, spanning from the Netherlands and Greece in the west to Latvia and Estonia in the east, make up almost a score of EU nations to sign up to the initiative.

British overseas territories including Gibraltar, the Isle of Man and Montserrat have also joined the pilot, which will explore the best ways to share information on companies’ true owners.

When the initiative launched on April 15, the UK Treasury explained that it will make it a deal harder for the rich and powerful to shirk their dues or for corrupt funds to be moved around, and allow for more effective investigations into financial wrongdoing.

The countries taking part will compile and automatically share a register naming the true owners of companies who have used secretive practices to conceal their involvement, sometimes to evade taxes.

However critics have noted the deal only extends to trust companies that “generate tax consequence” – a criteria tax campaigners say doesn’t go far enough, with many trusts purposely structured to avoid this.

But the deal, and likely the events preceding it, does seem to have persuaded nations such as the Netherlands, which have not previously been enthusiastic about greater transparency, to sign up.

However, the European jurisdictions most well known for the secrecy they offer, including Switzerland and Luxembourg, are yet to participate.

Similarly, British Overseas Territories notorious for the same reason have not joined in. Neither the Cayman Islands nor the British Virgin Islands, both among the most popular tax havens, nor Jersey or Guernsey, which rank in the top 20 financial secrecy jurisdictions in the world, have offered to take part.

The five EU countries that initially launched the deal also seem to have so far been unable to persuade other members of the G20, such as the US, China or Russia, to join in.

Upon launching the initiative, the five nations sent a joint-letter to the G20, stressing that to be “fully effective” the initiative would need to be “on a global basis” in hopes of convincing them to take part.

Osborne said: “It should be clear to all countries and tax jurisdictions that the world is moving firmly in the direction of greater tax transparency and the UK will continue to push for an internationally agreed blacklist for those that refuse to do the right thing.”

He welcomed the commitments made by Gibraltar, the Isle of Man and Montserrat, which have all signed up to the deal, and encouraged remaining overseas territories and crown dependencies to do the same.

Osborne and UK prime minister David Cameron have both come under pressure to bring Britain’s overseas territories in line.

The full list of EU nations signed up to the deal is: the Netherlands; Romania; Sweden; Finland; Slovakia; Latvia; Croatia; Belgium; Slovenia; Denmark; Malta; Lithuania; Cyprus; Bulgaria; Portugal; Estonia; Greece; and the Czech Republic. 

Australia also looks set to follow the UK's lead and create a public register revealing the identities of the oweners of secretive companies, with the government signalling they will make a formal commitment to the register in the coming weeks. 

Did you enjoy this article?

Related articles

Have your say


CIPFA latest

Most popular

Most commented

Events & webinars