Paradise Papers: enough talk, time for action

In recent days, the Paradise Papers have once again shined the spotlight on tax structures in tax havens. For Minister of Finance Johan Van Overtveldt, the stories of such long-standing tax systems don’t exactly come as a great surprise. “But what is new is that this government is effectively tackling them,” the Minister says. “We are taking it past lip service, instead punishing fraud and evasion more than ever before. We’re also fighting tax avoidance.”

Great strides towards fiscal justice

This is being accomplished by the Cayman tax Named after the Cayman Islands, one of the largest tax havens in the world. Also known as the “transparency tax”. The Cayman Tax ensures that complex foreign financial structures can no longer evade the tax authorities. These are often structures that allow assets to float between two owners, via trusts for example, so that neither party is taxed. Cayman tax among other things, which as a matter of fact was reinforced in the beginning of October at the suggestion of Minister van Overveldt: “We are refining the Cayman tax day in day out, to stop anything from slipping through the cracks. That means its introduction too, has not been without consequences. It is putting a great many people and companies off setting up structures abroad, which is to go to say that we are making great strides towards increased fiscal justice.”

The fight against real evasion and fraud has incidentally also reached cruising speed. Both the number of cases handled and the amounts of the sanctions have reached record highs.

Approach on an international scale

The Minister of Finance nevertheless reiterates that Belgium cannot stop multinationals from avoiding tax on its own. That problem has to be approached on an international scale. For example, Belgium is already cooperating with initiatives of the OECD and the European Commission. We were also the first to exchange information on the specific application of tax laws with other European Member States.

“That’s not to say that this is preventing us from already taking several measures off our own bat,” Johan Van Overtveldt clarifies. “For instance, in the corporate tax reform we only retained tax deductions with a direct link to research and development, the recruitment of researchers or real investments. In this way too we are already making a difference.”