WHEN ITALIAN prime minister Silvio Berlusconi speaks, he often means business, in every sense of the term. Now, however, his government may be embarked on a legislative path that could represent some very bad business for Ireland.
Two weeks ago, during a formal presentation of this week’s G8 summit in L’Aquila, Mr Berlusconi argued that good world governance required the adoption of an economic “code” which would essentially put tax havens out of business. No sooner said than done.
Even as the G8 leaders in L’Aquila were assessing the troubled global economy, including tax havens, the Italian government was trying to set the good example. Going through parliament at the moment is a complex “combat crisis” measure, a so-called manovra d’estate or summer budget.
This proposed legislation touches, as is the Italian tradition, on a wide range of issues – Alitalia, temporary workers, bankruptcy procedures, bank transfers, home evictions, energy costs, health service costs, unemployment benefits and many other matters.
However, articles 12 and 13 could yet attract a deal of Irish attention. Article 12 seems straightforward enough, in that it establishes that “investments and financial activities” carried out by Italians in “fiscal paradises” are illegal and represent tax evasion.
Article 13, however, takes the argument a step further when it suggests that Italian banks, industrial holding companies and insurance companies operating out of territories which have no commercial connection with the company’s business may be subject to heavy sanctions (as much as maybe five times the non-declared duty) if they are paying less than 13.75 per cent aliquota or corporate tax.
Officials at the treasury were unable to offer more details of the proposed legislation, pointing out that a measure like this could well suffer many amendments on its journey through both houses of parliament.
However, economists this week suggested that the effect would be to place countries such as the UK, Portugal (Madeira), Spain (the Canary Islands), the Netherlands and the Republic on a “black list” of tax havens that henceforth will be out of bounds for Italian business.
There is a strong irony about the Berlusconi government wanting to tackle tax havens seriously. For much of the 1990s, Mr Berlusconi was in court (in the All Iberian case) defending himself against charges that his Fininvest holding company had set up a complex network of offshore companies used for slush funds.
Last February, a Milan court handed out a 4½-year jail sentence to David Mills, estranged husband of British Olympics minister Teresa Jowell and one time London-based lawyer for Fininvest.
Mills was found guilty of committing perjury during the All Iberian trials in that, in return for a $600,000 bribe, he did not reveal the full picture of the “creative accounting” he was alleged to have done on behalf of his famous client. Mills is currently appealing.
