BRUSSELS: European leaders targeted Wednesday setting a year-end deadline to do away with banking secrecy, hoping to recoup a trillion euros in lost tax each year in a time of record recession and unemployment.
“Tax fraud and the hindrance of a real exchange of information — that has to end,” said German Chancellor Angela Merkel on arrival for a one-day European Union summit.
Leaders also aim to produce a joined-up energy policy, hoping to boost the European economy’s competitive edge.
The ambitious goal of making the sharing of bank records automatic across the EU is contingent, however, on the same deal being negotiated first with non-EU financial centre Switzerland and other tax havens on the bloc’s doorstep.
Otherwise, the holdouts in five years of trying to break down barriers — Luxembourg and Austria — will have room to delay implementation.
At this stage, the information exchange regime is intended to cover only savings accounts — a much more restricted measure than that brokered by the United States with foreign countries since 2010.
Some leaders, notably British Prime Minister and current G8 chair David Cameron, backed by French President Francois Hollande, want the drive extended to corporate taxation at a time when major companies, among them technology giant Apple in Ireland, have come under fire for paying only very low tax rates.
In final draft conclusions seen by AFP on Wednesday, leaders were to call for the rules covering automatic information sharing on savings accounts, first agreed in 2008, to be adopted “before the end of the year.”
One of the first to arrive at the EU’s Brussels HQ, veteran Luxembourg Prime Minister Jean-Claude Juncker, stressed that his country will only move in line with a broader deal.
“We are going to abandon banking secrecy and move towards the automatic exchange of information we want to bring in for January 1, 2015,” Juncker insisted.
However, this “necessitates negotiations with third countries, notably Switzerland, so we are in a position that does not skew competition,” he warned.
Austrian counterpart Werner Faymann made the same point. “We want data exchange with third countries.”
Oxfam estimates that more than $12 trillion (9.5 trillion euros) is hidden in EU-related tax havens — with the UK and its dependencies alone, from Guernsey to Grand Cayman, accounting for more than half.
As well as with Switzerland, the European Commission last week won a mandate to negotiate information-sharing norms with Andorra, Monaco, San Marino and Lichtenstein.
In Washington on Tuesday, Apple chief executive Tim Cook was closely questioned by US lawmakers on what were attacked as “sham” subsidiaries and “convoluted” strategies to shift profits offshore.
Reports said that some Apple units in Ireland pay only a 2.0-percent tax rate, far short of the country’s already low and much criticised 12.5-percent corporate tax levy.
But Irish Prime Minister Enda Kenny — the current EU chair — insisted that “Ireland does not do special deals with multinationals.”
He said Ireland would continue to compete for international business but maintained that its “statute-based, transparent” tax regime was only one reason for companies to locate in the country.
Britain’s Cameron nonetheless indicated that securing a level playing field on corporate tax was a key factor going forward.
“I believe in low taxes for businesses … (but) we have got to be sure that when we set those taxes, companies pay them,” he told reporters as he arrived.
Italian Prime Minister Enrico Letta complained on the eve of the summit of “incredible hypocrisy on a European level” in the fight against tax fraud, “because of the loss of easy earnings” for key states.
EU leaders will also review energy policy at the summit, key energy-producing states like the UK aware that a shale oil and gas revolution in the United States has left them trailing.
The draft conclusions make no direct mention of shale, referring only to European Commission plans to open access to “indigenous sources of energy with a view to their safe and sustainable exploitation.”
Alongside Britain, Hungary, Poland, Romania and Spain are in favour of developing shale energy but others, including France, are opposed, citing the environmental issues involved.
Lithuania’s President Dalia Grybauskaite said Europe was at last “realising we need to talk with one voice” on energy.
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