France’s Le Maire Calls For Tax Haven Sanctions

French finance minister Bruno Le Maire has urged countries to approve tougher sanctions against jurisdictions that do not adhere to standards in tax transparency in the wake of the Paradise Papers leak.

Le Maire told reporters ahead of a meeting of European Union finance ministers in Brussels that such sanctions could take the form of the withdrawal of any financial support from international institutions such as the International Monetary Fund and the World Bank.

La Maire said while blacklisting non-cooperative jurisdictions in the area of taxation was a good step towards promoting tax transparency, it is not enough on its own to convince certain territories to clean up their acts.

“Having a list of countries is one step, but we also need sanctions and we have to implement the sanctions,” he said.

In November 2016, the European Council resolved that a EU list of non-cooperative jurisdictions should be drawn up in 2017. The “screening” of third countries was scheduled for completion by the end of September, to enable the Council to endorse the full list by the end of this year. Screening is intended to be a continuous and regular process.

The EU has also considered what kinds of sanctions could be applied to jurisdictions deemed to be non-cooperative. According to a document seen by Bloomberg BNA earlier this year, four types of sanctions have been proposed, include withholding taxes, new controlled foreign company rules, the elimination of deductible costs such as royalties, and participation exemption limitations.

Bloomberg BNA said that the EU has also considered a scheme whereby individual member states could apply different sanctions against the same jurisdiction.