May 5, 2009 / 4:19 PM / in 8 years

Italy mulls blacklist for tax havens

3 Min Read

BRUSSELS (Reuters) - Italy plans to take action against firms that invest funds in tax havens and is considering drawing up its own blacklist of such countries, Economy Minister Giulio Tremonti said on Tuesday.

Speaking to reporters in Brussels after meeting with his European Union counterparts, Tremonti said the Group of 20 rich and emerging nations was jointly committed to combating tax havens, but Italy was also ready to take action of its own.

"It could be very sensible for Italy to draw up its own list," Tremonti said. "I think the time has come for each country to start acting a bit more on its own. We're studying steps to guarantee our fiscal sovereignty."

One piece of legislation planned by Italy would assume any funds found in a tax haven were there to avoid taxes unless proven otherwise, he said.

Another proposal would mean tax evaders holding their income in offshore havens would be punished more severely than other evaders, he said.

Tremonti added that among EU finance ministers there was growing support for the idea of abolishing current EU rules guaranteeing bank secrecy, in order to make it easier to tackle tax avoidance and financial crimes.

Although the unanimity rule hindered progress on the subject at a European level, given the interests some countries have in protecting bank secrecy, Tremonti said the current legal regime was bound to change.

"Tax evasion persists partly because the money stolen (from the taxman) can be hidden away and there is an EU directive that protects it," Tremonti said. "I believe that one of the ways to fight tax evasion is to eliminate this comfortable situation."

The international financial crisis has sparked moves for a tightening of financial regulation, including a crackdown on offshore tax havens, and countries such as Switzerland and Singapore have said they are willing to relax bank secrecy.

On Monday, U.S. President Barack Obama said he would revise a policy that lets U.S.-based global companies defer income earned abroad and close a loophole that government officials say lets companies hide foreign subsidiaries.

Italian Treasury Director General Vittorio Grilli, speaking at the same news conference as Tremonti, said euro zone finance ministers had also discussed how to apply the Stability and Growth pact limiting budget deficits in the face of the acute global recession.

One idea being considered was to base enforcement of the Pact on budget deficits stripped of the effect of the economic cycle, rather than on nominal deficits, Grilli said.

He added that Italy, which is expected to post a nominal deficit of more than 4 percent of gross domestic product this year, was one of the "very few countries" whose deficit, once adjusted for the cycle, will be below 3 percent of GDP this year and in 2010.

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