Jurisdictions like the Bahamas designated as tax havens by the European Union could face financial sanctions, the European Commission has said.

In an article by Andrew Rettman in Brussel Today, it is reported that the list of potential penalties included withholding of tax revenues collected by EU states that were due to blacklisted entities, freezing EU development funds, and blocking of loans from the European Bank of Reconstruction and Development (EBRD), Pierre Moscovici, the EU taxation commissioner, said in Brussels on Tuesday (28 November).

“We’re going to make EU funding conditional on good tax criteria,” he said.

Moscovici spoke to MEPs ahead of a decision by EU finance ministers, expected next Tuesday, on which countries and protectorates to name and shame as tax avoidance black spots.

“I hope the list is a serious one. It’s up to member states. Their reputation is at stake. The commission won’t be able to go along with a list that isn’t serious,” he said.

He also said Tuesday’s decision will not be the EU’s last word on the matter.

“There’s going to be a constant process of updating the list,” Moscovici said.

Oxfam, an international NGO, said earlier on Tuesday that, according to the EU’s own criteria, there should be four EU states – Ireland, Luxembourg, Malta, and the Netherlands – on the blacklist, as well as 35 other jurisdictions.

But EU states are to be automatically excluded from the list, with Oxfam saying that that amounted to “whitewashing” European complicity in tax dodging.

Moscovici said that “as a citizen”, he “sympathises” with Oxfam’s approach.

But he claimed that the NGO’s listing of the EU four used criteria “far beyond” what had been agreed for the blacklist and had failed to take into account “commitments undertaken [for tax reforms] as part of this process”.

Speaking at a European Parliament hearing on the issue on Tuesday, the EU commissioner also said he had no mandate to punish countries such as Ireland for having a near-zero corporate tax rate.

“We [the Commission] have no competence on tax rates,” he said.

“Whatever my personal preference may be, I’m not going to propose a minimum corporate tax. I don’t want to wave a red flag at people in issues that are far beyond my competence,” he said.

Some MEPs, such as German green Sven Giegold, attacked EU member states at Tuesday’s hearing for obstructing or diluting EU laws on greater tax transparency.

“If we draw a conclusion, it’s a blockade,” Giegold said.

But Moscovici said that view was too “pessimistic” and that, in his dealings EU finance ministers there was genuine will to crack down on tax abuse.

Brexit, not Singapore

He said his private talks with two successive British finance ministers also indicated that the UK would “not become a huge Singapore or offshore tax haven just near our borders” after it left the EU in 2019.

The tax haven blacklist and the EU parliament hearing came after the latest revelations on tax dodging by the world’s wealthiest companies and individuals.

The so-called Paradise Papers leak, publicised by the ICIJ, a Washington-based group of investigative journalists, exposed how law firm Appleby helped US tech giant Apple, former German chancellor Gerhard Schroeder, and the British Queen, among others, to conceal their wealth from tax authorities.

The list also included the EBRD itself as well as Belgian, Danish, Dutch, Finnish, Lithuanian, and Slovenian state entities.

Jan Strozyk, a German journalist who worked with the ICIJ, told MEPs the involvement of people such as Schroeder risked normalising the practice in people’s eyes.

“People will say in future: ‘If even Mr Schroeder is using offshore companies in the British Virgin Islands then why shouldn’t I?’,” he said.

Kristof Clerix, a Belgian journalist with the ICIJ, said it was “ironic” that Danish and Dutch state entities dealing with development aid for poor countries used shell firms to avoid paying taxes on projects in the same jurisdictions in the third world that they were supposed to be helping.