UK Steadfast On Floundering Withholding Tax Proposal
Despite a series of meetings
in London last week Finnish finance minister Sauli Niinisto
failed to make any progress regarding the standoff between the
EU and the UK over the EU's proposed 20% european withholding
tax. Visiting London in his capacity as president of the EU council
of finance ministers, Nijnisto met separately with banks, industry
representatives, Bank of England Governor Eddie George and UK
Chancellor Gordon Brown in a last-ditch effort to find a compromise
over the UK's opposition to the EU's proposals for tax harmonisation.
Mr Niinisto failure to shift
the UK from its openly hostile opposition to the reforms means
that it is highly unlikely that a consensus position on tax reform
will be formed before December's EU summit in Helsinki. The UK government has consistently
opposed the proposed withholding tax on the basis that it would
jeopardise the future of its lucrative international bond market
and would force a large segment of this business to move offshore.
The UK has put forward a number of alternative schemes that focus
on enabling better exchange of information between tax authorities,
but this approach has been rejected by other EU countries, most
notably Luxembourg and Austria because of their banking secrecy
laws. Luxembourg has also tabled
its own alternative scheme which is based on a flat 10% withholding
tax, but so far this has not been well received either. .
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