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90 • Fifty Shades of Tax Dodging Special Purpose Entities (SPEs) According to the Ministry of Finance, SPEs are not forbidden in Slovenia. They are a form of special vehicle for securities defined in the country’s previous banking act. 997 However, with the passing of a new banking act in March 2015, this definition has been removed, which means that Slovenian law does not currently contain any definition of SPEs. 998 It is difficult to say whether SPEs play any important role in the Slovenian economy, but given that FDI flows through the country are among the lowest in the OECD, it is unlikely that the country is being used to route FDI. 999 Patent box Slovenia does not currently have a patent box and the Ministry of Finance reports that there are no plans to introduce one. 1000 The Ministry declines to state whether they are concerned about the effect of other EU Member States’ patent boxes on the Slovenian tax base. Tax treaties In 2014, the government signed tax treaties with two low-tax jurisdictions – the United Arab Emirates and Luxembourg. Both treaties contain significant reductions in withholding tax rates compared to the statutory rate applied by Slovenia to non-treaty countries. 1001 The Ministry of Foreign Affairs reports that Slovenia’s tax treaties with developing countries are not solely based on the OECD or UN models, but are rather based on the mandate for negotiating that is determined by the government. 1002 The Ministry of Foreign Affairs also reports that neither it nor any other development stakeholder is involved in the negotiation of tax treaties with developing countries. 1003 Financial and corporate transparency In 2014, the Financial Administration of the Republic of Slovenia filed 18 criminal reports to the State Prosecutor’s Office due to the suspicion of committing the criminal offence of tax evasion, according to Article 249 of the Criminal Code. It also filed 73 announcements on suspicions that a criminal offence was committed. 1004 In the same year, the police sent 84 criminal reports on committed criminal offences of tax evasion to the State Prosecutor’s Office, with a total value of €14,329,000. 1005 Public reporting for multinational corporations On 13 May 2015, the new Banking Act came into force, which introduced the provisions of the Capital Requirements Directive into Slovenian legislation. While the Banking Act does not contain the country by country reporting requirement, the Ministry of Finance reports that it expects the Bank of Slovenia to prescribe what financial institutions should report on in their financial statements. 1006 The Ministry of Finance reports that it is supportive of extending the country by country reporting obligation to all economic sectors, but only based on the OECD model and states that “information so obtained has to be confidential.” 1007 The Ministry has not yet settled on a threshold for which companies should report if they were to introduce a requirement for country by country reporting for all sectors, stating that this is a political decision. 1008 Should the government decide to make use of the threshold recommended under the OECD’s Base Erosion and Profit Shifting (BEPS) project, only six multinational companies listed in Slovenia would have to report on a country by country basis. 1009 Using the EU’s definition of ‘large undertakings’ instead, 27 listed companies would be covered by the reporting requirement. 1010 Ownership transparency Under existing laws, it is possible to set up structures in Slovenia that effectively obscure the real owners of legal entities. For example, a corporate law firm based in Slovenia reports online that “even though Slovenia is not categorized as a tax haven like other offshore jurisdictions, foreign entrepreneurs can benefit from [...] the possibility to appoint a nominee director […which allows] the investor to protect his/her identity.” 1011 However, with current plans, this secrecy mechanism is set to become a thing of the past. Slovenia is on course to implement the EU’s anti-money laundering directive in record speed, having indicated that it plans to have a legislative proposal ready by the second half of 2015, which it hopes to pass by the end of 2015. 1012 Still more impressive and crucial, Slovenia has indicated a willingness to grant wider access to the register of beneficial owners of companies than the minimum requirement in the EU’s directive. The Ministry of Finance reports that the new regulation will require legal entities to provide information on their beneficial owner, and that the information will be published in the public business register (AJPES). It also reports that, while it will make use of the ‘legitimate interest’ test to limit those who have access to the full range of beneficial ownership information, it will at the same time grant ‘the general public’ access to a sub-set of beneficial ownership information, regardless of whether they can demonstrate a so-called ‘legitimate interest’.
Fifty Shades of Tax Dodging • 91 The Ministry reports that it has not yet arrived at an agreement on how to define those with a ‘legitimate interest’ and it is also still unclear what the difference will be between the information that the general public and those who can demonstrate a ‘legitimate interest’ will be. 1014 Nonetheless, Slovenia has taken important steps towards corporate transparency by indicating a willingness to go beyond the EU’s minimum requirements and establish transparency for the public when it comes to beneficial ownership. Banking secrecy March 2015 saw the adoption of a new bank law (the socalled Zban-2), 1015 which saw some welcome easing of bank secrecy. With the new law, the National Assembly has been granted access to confidential bank information under certain conditions in order to fulfil its role in supervising the financial sector. The protection of banking secrecy has also been removed in cases of criminal prosecutions. Finally, the new banking law makes it mandatory for banks to adopt a whistleblower policy to expose potential wrongdoing. 1016 EU solutions The government of Slovenia has a somewhat ambivalent track record on supporting EU coordination on taxation. On the one hand, Slovenia is a part of the smaller group of 11 EU Member States that are willing to implement the so-called Financial Transaction Tax – a small levy on financial trading. 1017 This indicates a willingness to push for cross-border tax coordination. However, when it comes to coordination through the introduction of a Common Consolidated Corporate Tax Base (CCCTB), Slovenia has been more sceptical in the past. It is among nine EU Member States that officially objected to the Commission’s CCCTB proposal when it was discussed in 2011. 1018 It is not clear whether the current government intends to continue these objections or whether the country’s stance has changed. In early 2015, the government reported that it “supports the efforts of the Commission” in their fight against tax avoidance and evasion, but some uncertainty exists as to the extent and content of this support. 1019 Global solutions The Ministry of Foreign Affairs reports that Slovenia does not consider either taxation or illicit financial flows as part of the policy coherence for development agenda. 1020 As a consequence, Slovenia does not have any capacity-building programmes for developing countries on taxation and does not have any plans to conduct a spillover analysis of its tax policies’ effect on developing countries. 1021 Despite this, the Ministry of Foreign Affairs reports that the government of Slovenia considers taxation as one of the key topics, since it mobilises public funds in support of development. However, in a globalised world, the government also recognises that taxation provides many opportunities for evasion and avoidance, and therefore calls for efficient international cooperation. 1022 The Ministry of Foreign Affairs also reports that the government of Slovenia supports the call to establish an intergovernmental body on taxation under the auspices of the UN. 1023 Slovenia attended the Third International Conference on Financing for Development in Addis Ababa, represented by the Permanent Representative of Slovenia to the United Nations in New York and the Head of the Department for International Development Cooperation Policies in the Ministry of Foreign Affairs. The President of the Slovenian NGO African Centre, and Representative of the Centre of Excellence in Finance, an international organisation, headquartered in Slovenia, also both accompanied the official delegation formally as representatives. 1024 Conclusion Through granting wider access to the register of beneficial owners of companies than the minimum requirement in the EU’s directive, Slovenia has taken important steps towards corporate transparency for the public when it comes to beneficial ownership. Equally important, Slovenia has also expressed willingness to support the call to establish an intergovernmental body on taxation under the auspices of the UN, although the government unfortunately seems to have followed the general EU line during the Third Financing for Development conference in Addis Ababa. On the other hand, Slovenia does not support introducing public country by country for all sectors, but instead insists that the information should be kept confidential. The government is yet undecided about the threshold for which companies should report. When negotiating tax treaties, Slovenia still does not solely use the UN model and still does not include any development stakeholders in the negotiations of tax treaties with developing countries. In addition, the focus on policy coherence for development seems low and no spillover analysis is planned to assess whether Slovenia’s tax policies have negative impacts on other countries.
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Contents Glossary 4 Executive summa
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