92003E1538

WRITTEN QUESTION E-1538/03

by Charles Tannock (PPE-DE) to the Commission

(7 May 2003)

Subject: EU and WTO rules regarding business with companies based in tax havens

There has been some discussion within the UK about the propriety of the sale by the Inland Revenue of tax and customs offices to the Bermuda-based company Mapeley Steps for GBP 370 million. Some of the details of the case are laid-out on page 26 of the 21 February 6 March 2003 issue of the investigative/satirical publication Private Eye which has taken a close interest in the case. The Chairman of the Inland Revenue appears to have justified the sale of the buildings on the grounds that it is contrary to EU and WTO rules to turn-down a contract with a company on the grounds that it operates within a tax haven, although there appears also to be some dispute as to whether Mapely Steps was registered in Bermuda or the UK at the time of the sale.

Can the Commission clarify the EU and WTO rules regarding the sale of government property to companies based in tax havens and whether the government in question would be entitled to take into account the overall net benefit to the Exchequer when deciding to make a sale? Can the Commission also confirm whether or not it is correct that the United States government will not sign contracts or come to arrangements with any organisation based in a tax haven,

and, if so, whether that is in the opinion of the Commission compatible with the US WTO. obligations? Finally, has the Commission asked the British government for clarification of the details surrounding this particular sale and, if so, is the Commission satisfied that the British Government and the Inland Revenue have acted in conformity with EU law?

Answer given by Mr Lamy on behalf of the Commission

(10 June 2003)

There are no World Trade Organisation (WTO) rules governing property transactions with companies based in tax havens. WTO agreements generally apply to trade in goods and services and not to property transactions.

Community law on taxation does not contain any provisions specifically applicable to property transactions carried out between the public authorities of a Member State and a company based in a jurisdiction described as a tax haven. However, and more generally, the Commission considers that more transparent tax systems would minimise the opportunity for fraud and tax evasion. It reiterates its commitment to eliminating, on as broad a geographical basis as possible, harmful tax practices which distort free and fair competition and hamper the cross-border activities of businesses.