Macau Opinion | Taxing matters

 Last week, the EU published a list of ‘non-cooperative tax jurisdictions,’ immediately dubbed the blacklist of tax havens. That is, territories that are suspected (in some cases more than suspected) of assisting or at least being tolerant of tax avoidance by individuals and companies operating in the EU.

The EU claims the use of these jurisdictions costs millions in forgone taxes every year. Serious issues concerning the fairness of the distribution of the tax burden follow, as taxes avoided by some will have to be borne by others. These problems have long been on the international agenda, and organisations such as the OECD or the IMF, not to mention the EU itself, and, on a mostly parallel track, the United States, have produced abundant documentation on these matters.

Unfortunately, most of last week’s news focused either on the negative – if not shadowy – connotations of the expression blacklist, always guaranteed to get into the media headlines or the often disingenuous denials of any wrongdoing by those targeted in that list. The heart of the matter was hardly approached, if at all.

Surely, it is appropriate to scrutinise the adequacy of the listing process and its technical and political impact. All the criteria used, and the procedures followed, are obviously debatable. Inevitably, alternative criteria or approaches will have both advantages and limitations that we should bear in mind. Proceedings may be, in a variable measure, sensitive to other political considerations.

What we should avoid, however, is the current state of affairs, which seems limited either to statements of a fact, the presence in that list, without looking into its causes or meaning, or to emphatic proclamations of good behaviour that do not address the core issues raised by that inclusion. However, there is one question that deserves immediate elucidation and would be a good starting point for a better reflection on these matters.

According to the EU, the process of preparation for this blacklist started more than one year ago, and all the jurisdictions under observation (92 in total) were informed and asked to co-operate. They were then notified of the results. Those included on the list were granted the opportunity to be removed from it if they committed to addressing the shortcomings identified. Only 17 did not. Why was that the case for Macau? Which assurances or commitments were too much to be accepted to avoid the blacklisting?