Issue link: https://maltatoday.uberflip.com/i/1345126
16 maltatoday | SUNDAY • 28 FEBRUARY 2021 LUXEMBOURG has dismissed accusa- tions of rampant tax avoidance and in- sisted that the country respects "all the applicable European and internation- al rules and standards in terms of tax transparency , the fight against tax abus- es and the fight against money launder- ing and the financing of terrorism". The duchy is reeling from relevations made public in an exercise dubbed as Openlux, a collaboration between Süd- deutsche Zeitung, Le Monde, OCCRP and 14 other media partners about tax avoidance practices in Luxembourg. Journalists made Luxembourg's reg- ister of beneficial owners of compa- nies and investment funds completely searchable for the first time. The register revealed that more than 250 billionaires run companies in Lux- embourg, with assets of around €6,500 billion. In addition, there are an es- timated €4,500 billion in investment funds. At least 4,600 beneficial owners of companies Are German, while around 15,000 French businesspeople own Lux- embourg companies with total assets of €100 billion, equal to 4% of French GDP. The data was first relased on Sunday 7 February, with regular updates since. Luxembourg immediately responded to the accusations. "The government rejects the assertions contained in this series of articles as well as the totally unjustified representation of the coun- try and its economy," a statement read. "The Grand Duchy was one of the first European countries to set up a public register of beneficial owners (RBE) and is one of the only countries in the Euro- pean Union to have opted for an open and transparent register', accessible free of charge online." The articles revealed there are 55,000 offshore companies managing €6,500 billion in a country of around 2,500 sq.km. In addition, the database of owners of Luxembourg companies reconstituted by Le Monde included several dozen people appearing in cases of corruption, tax fraud and money laundering, as well as individuals linked to organised crime or who have been the subject of sanc- tions. Luxembourg's opposition Pirate Par- ty noted that the RBE was made public thanks to pressure from civil society and against the will of many EU member countries. It urged the government to take the revelations seriously and called on civil society to mobilize to ensure that "these practices of tax avoidance and evasion are finally stopped". Sven Clement, of Piraten, said that even if Luxembourg were to ensure that large multinationals make tax optimi- zation completely legally, the country would still be at the origin of billions of euros in lost tax revenue for other coun- tries where these revenues could have been invested for the community. In the same vein, the Collectif Tax Justice Lëtzebuerg (CTJL) said Luxem- bourg should renew its international solidarity towards its neighbours and the other countries of the international community by fighting against tax eva- sion of multinational companies and large fortunes". The CTJL said the priority should be strengthening the capabilities of the "Commission de surveillance du secteur financier (CSSF,) the Ministry of Fi- nance, the Luxembourg Business Regis- ters, and the Financial Intelligence Unit. The German Member of the Europe- an Parliament, Sven Giegold, financial and economic policy spokesperson of the Greens/EFA group, said that the re- action of the Luxembourg government could not be more brazen. "The country is a thriving intra-Eu- ropean tax haven. If Luxembourg de- nies being a tax haven, this can only be described as fake news. Luxembourg shows no remorse whatsoever, even though its tax policy causes massive fi- nancial damage to other EU countries," he said. "During the European Semester of the last three years, the EU has explicit- ly asked Luxembourg to change its tax system because it invites aggressive tax avoidance." Giegold said that Luxembourg today acts mainly as a gateway between Euro- pean countries and tax havens around the world. "To act as a tax avoidance gateway, one does not need to have a 'harmful' tax system in the technical sense," he said. "The government's statement is a red herring. It is true that nationals and foreigners are treated equally under the law. But the tax rules make Luxembourg particularly attractive for the manage- ment of assets abroad. Luxembourg bears a great responsibility in this re- spect, to which the government should not react with ostrich policies." He noted that, more numerous than the Germans and Italians combined, more numerous than the Luxembourg- ers themselves, the French figure in pole position in the list of owners of Luxem- bourg companies reconstituted by Le Monde for the OpenLux survey. Nearly 15,000 French people , in- cluding 37 of the 50 richest families in France, including art collectors, film producers, wealthy heirs, landowners, figures of the "start-up nation, own companies in Luxembourg, holding as- sets equal to 4% of France's GDP. "This is a bonanza that would be damn useful for our public services these days," Giegold said. Aurore Lalucq, S&D spokesperson on tax matters, said that if anyone had any doubts if Luxembourg was a tax haven, OpenLux had dispelled them. "Companies holding assets include Amazon and Fiat – that is the scale of tax avoidance revealed by the investiga- tion. Transparency rules passed by the European Parliament on anti-money laundering have helped to disclose the true scale of the scandal," she said. "We need a global, or at least an EU- wide minimum effective tax rate, to cut tax competition between member states. Ordinary people must not be left to pick up the unpaid tax bill of the rich and powerful multinational companies." Lalucq said cooperation between tax administrations must be deepened to make it harder for tax evaders to escape the net. "OpenLux has revealed that a large majority of Luxembourg companies are purely financial holdings that can be used to disguise tax avoidance, so we need substance rules to put an end to such shell companies," she said. "EU policies on cross border tax avoid- ance should be seriously strengthened when it comes to wealth and high per- sonal income." Jonás Fernández, S&D spokesperson for economic and monetary affairs, said: "Some tax justice solutions are within reach to ensure transparency delivers fully. As the EU is about to revise its list of tax havens next week, we recall our demand to lead by example and to sub- ject EU countries to the same rules and criteria as other countries. The EU list- ing criteria should also be revised to en- sure greater transparency and seriously halt tax avoidance opportunities. In two weeks, EU ministers will decide on pub- lic country-by-country reporting, which has been blocked for years in the Coun- cil. OpenLux proves once again that we need this reform of company law to oblige transnational companies to dis- close income tax information and there- by prevent tax avoidance." Fernández said the EU loses €170 billion every year in taxes due to such loopholes that enable aggressive tax planning. "Money we urgently need to build hospitals and schools, especially now during the pandemic. It is time for tax justice." German MEP Sven Giegold (Greens/EFA): "During the European Semester of the last three years, the EU has explicitly asked Luxembourg to change its tax system because it invites aggressive tax avoidance." This article is part of a content series called Ewropej. This is a multi-newsroom initiative part-funded by the European Parliament to bring the work of the EP closer to the citizens of Malta and keep them informed about matters that affect their daily lives. This article reflects only the author's view. The European Parliament is not responsible for any use that may be made of the information it contains. MEPs lead the charge on 'Openlux' tax transparency battle