On January 1, 2014, Latvia will become the next member of the European Union to join the common currency, in spite of the economic crisis that continues to plague the political and economic block. European finance ministers approved the country to join the common currency in spite of the fact that Latvia plans to become the next Cyprus by establishing at the same time a banking haven like the tiny island nation that slid into vassal status recently because of its economic profligacy.
Latvia’s new tax laws will go into effect in January as well, in order for it to compete “on a level with Ireland, Cyprus and Malta,” which could further destabilize the European economy. Latvia is lured by the capital that the euro will bring.
The European Union has made tax evasion a top priority every since the International Consortium of Investigative Journalists (ICIJ) exposed the vast scale of tax evasion undertaken by multinationals around the world.
“Instead of eliminating established tax havens, we have added a new one to the euro zone,” says Sven Giegold, a financial expert with the Green Party in the European Parliament.”
Ireland and Cyrus each had 12.5 percent corporate tax rate, which is a little more than half of the rate of the rest of the nations of Europe. They have both gone bankrupt and sought emergency aid from the EU. Latvia’s corporate tax rate is 15 percent, which could eventually add to the burdens of the Euro zone.
In addition, dividends of stock held by holding companies are tax free since the beginning of 2013, and transferring funds out of Latvia is also tax free. Latvia also offers other “loop holes,” tax breaks and other benefits such as lower fees for transfers than other such countries.
These benefits open the door to all manner of tax evasion and money laundering by wealthy individuals or crooks. Some are now calling Latvia the “Luxembourg for the poor.”
As money-laundering suspicions continue to arise, banks take in money from countries like Cyprus, where depositors saw a large percentage of their deposits confiscated during the recent crisis. Latvia still got approval to join the Euro zone. It appears that tax havens will continue to be admitted to the common currency area. And they will continue to present even more risks to the already shaken currency.
Keep in mind that as the Holy Roman Empire continues to rise, there are reasons other than their banking practices to bring them under the control of the Euro zone.
“Who hath taken this counsel against Tyre, the crowning city, whose merchants are princes, whose traffickers are the honourable of the earth? The LORD of hosts hath purposed it, to stain the pride of all glory, and to bring into contempt all the honourable of the earth.” Isaiah 23:8