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Republic likely to be in firing line as EU to consider tougher tax haven listing

A group of European Union countries is calling for the bloc to cast a wider net when listing tax havens and to consider imposing stricter sanctions for countries facilitating tax avoidance, according to an EU document and an EU official. The move is likely to spark some fear in Government circles.

The document, prepared by the Danish government, urges a discussion on whether “current criteria provide sufficient protection against tax avoidance and evasion” and pushes for “strengthened” standards and sanctions. Germany and France were among its backers.

It also calls for a discussion on how member states deal with the issue, asking “Do we internally have sufficient safeguards against tax avoidance and evasion?”

This potentially sets up a dispute with the Republic and other EU members including Luxembourg and the Netherlands, which widely use low tax and other sweeteners to host EU headquarters of foreign firms, depriving other EU governments of tax revenues from profits that corporations make on their territory.

At a meeting of EU finance ministers on Thursday, several EU states backed the Danish proposal, one EU official said, naming Germany, France, Spain and Austria among the explicit supporters.

Croatia, which holds the EU chair from January, said the review of the current criteria would be discussed during its six-month presidency, the official said. The review was likely to take place in February or March, the official added.

After revelations of widespread tax avoidance schemes used by corporations and wealthy individuals to lower their tax bills, the EU set up a blacklist in 2017, but its definition of tax havens was narrow. For example a 0 per cent corporate tax rate is not a sufficient condition for being listed.

It also screens only non-EU countries, saying its 28 states were already applying high standards against tax avoidance.

Blacklisted

Foreign jurisdictions are blacklisted if they do not meet EU standards on tax transparency and regulation. Countries that commit to changes are included in a so-called grey list until they deliver, and if they miss deadlines, they end up on the blacklist.

The listing has pushed more than 60 countries to pledge changes, but only eight jurisdictions are currently blacklisted. They are mostly Pacific and Caribbean islands with little financial relation with the EU.

The Republic, Luxembourg and the Netherlands were listed in a report by International Monetary Fund researchers in September as world-leading tax havens, together with Hong Kong, the British Virgin Islands, Bermuda, Singapore, the Cayman Islands, Switzerland and Mauritius. None of them are on the EU list.

The EU Commission supported the Danish initiative, the EU official said. Tax commissioner Paolo Gentiloni has publicly pledged to work for sanctions against blacklisted jurisdictions, which now face only reputational damage and curbs on small EU funding, but no heavier penalties by member states. – Reuters

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EU Commission gives green light to broadband plan

The European Commission has approved the Government’s National Broadband Plan, saying it complies with EU state aid rules.

The decision means one of the final hurdles preventing the State from signing the contract with the preferred bidder, National Broadband Ireland, has been overcome.

The Commission said the €2.6bn of public support will result in high-speed broadband services being brought to consumers and businesses in areas with insufficient connectivity in Ireland.

“The National Broadband Plan in Ireland is expected to address the significant digital divide between urban and rural areas in Ireland, enabling Irish consumers and businesses to benefit from the full potential of digital growth,” said Competition Commissioner Margrethe Vestager.

“This will help households and businesses in areas of Ireland where private investment is insufficient.”

The Commission assessed the planned measures under the EU state aid rules, including broadband guidelines dating from 2013.

It decided that the scheme’s “positive effects on competition in the Irish broadband market” outweigh potential negative effects brought about by the public intervention. 

The plan aims to bring download speeds of at least 150Mbps and upload speeds of 30Mbps to parts of the country where commercial operators claim it is not commercially viable for them to offer a service.

Services will be offered on a wholesale access basis to all operators and this will incentivise private investment in the provision of high-speed internet services in the areas concerned, the Commission said.

“The Irish authorities have developed a comprehensive mapping of available infrastructure and carried out numerous public consultations in order to determine the target areas,” it stated.

The decision has been welcomed by Minister for Communications, Richard Bruton.

“Today’s decision from the Commission allows the government to proceed towards signing the National Broadband Plan contract with National Broadband Ireland which will commence the roll out of 147,000km of fibre to homes, farms, businesses and schools across our country,” he said in a statement.

Department sources were unable to say how soon it would be before the contract is signed.

Google complying with EU order in shopping case, says Vestager

Google complying with EU order in shopping case, says Vestager

Google is complying with an EU order to boost competition in online shopping, Europe’s competition chief said today, brushing aside complaints from rivals demanding more regulatory action.

Google was hit with a €2.4 billion fine two years ago for unfairly promoting its own comparison shopping service.

But it has since offered to allow competitors to bid for advertising space at the top of a search page, giving them the chance to compete on equal terms.

European Competition Commissioner Margrethe Vestager said the measure appeared to be working.

“Now we are in a situation where in 75% of queries there would be at least one rival to Google in the shopping box and 40% of clicks would go to a merchant hosted by one of the rivals,” Vestager told reporters on the sidelines of a Centre for European Reform event.

“This means we do not have a non-compliance case but at the same time also means that we keep monitoring monthly developments,” she added.

Open Internet Project, a Google critic, however argues that the situation has not improved.

“By putting these Google-powered Shopping Units at the top of every relevant results page, above more relevant comparison services, Google continues to reserve the important market for comparison shopping services to itself,” Open Internet Project said in a statement last week.

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EU gets green light for US trade talks

EU gets green light for US trade talks

EU countries gave initial clearance yesterday to start formal trade talks with the United States, EU sources said, in a move designed, but not guaranteed, to smooth strained relations between the world’s two largest economies.

The European Commission has sought clearance for two negotiating mandates – one to cut tariffs on industrial goods, the other to make it easier for companies to show products meet EU or US standards.

The commission presented its mandates in January and found support from most EU members. France resisted, however, insisting that agriculture should not feature in the talks but that climate change provisions should – a difficult demand given US President Donald Trump’s withdrawal from the Paris climate agreement.

The EU and the US reached a detente last July when Trump agreed to hold off from imposing punitive tariffs on EU cars as the two sides sought to improve economic ties.

US tariffs still apply to EU steel and aluminium, however, while Trump has threatened further tariffs on €9.8bn of EU products related to a long-running aircraft subsidy dispute.

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