EU finance ministers remove 8 jurisdictions from tax haven blacklist

EU finance ministers today removed 8 jurisdictions (Barbados, Grenada, the Republic of Korea, Macao SAR, Mongolia, Panama, Tunisia and the United Arab Emirates) from the EU tax haven blacklist, which is designed to get countries to reform their tax models based on EU criteria. They were moved onto the so-called ‘grey list’, meaning they remain under monitoring by the EU to ensure they implement the reforms they have committed to.

Blacklisted countries at the end of 2018 could potentially face ‘defensive measures’ being applied to them, or face a loss of revenue from EU member states.

Listed countries to reform their tax systems

The EU list of non-cooperative jurisdictions for tax purposes include commitments to increase transparency, work towards fair taxation, and implement anti-BEPS (base erosion or profit shifting) measures. They are intended to combat the problems of tax avoidance, tax evasion, and tax fraud.

The list is split into two parts. The longer list of countries, the greylist, features countries that have committed to reform their tax systems by the end of 2018. The ‘blacklist’ is for countries that have refused, or haven’t responded to calls to reform their tax systems. Any countries that haven’t implemented their commitments will be shifted from the greylist back onto the blacklist.

American Samoa, Bahrain, Guam, Marshall Islands, Namibia, Palau, Saint Lucia, Samoa and Trinidad and Tobago all remain on the blacklist.

The EU will also send letters to 8 jurisdictions in the Caribbean in February 2018. These jurisdictions had been included in the initial screening process, but the process was frozen following the extraordinary tropical hurricane season facing the region in the autumn of 2017.

EU level sanctions to be proposed, Commission wants member state sanctions too

At a press conference focused on the EU’s new VAT proposals, Economic and Finance Commissioner Pierre Moscovici mentioned how in the coming weeks he would propose EU-level sanctions on those that made no progress in reforming their tax laws and found themselves on the blacklist at the end of 2018, but reiterated his call for member states to agree on their own sanctions, which will constitute the “main part” of the sanctions.

The press release alludes to potentially losing revenue from EU member states, or defensive measures being applied if the tax reforms aren’t implemented.

Commissioner Moscovici also called for member states to publish the letters of commitment they got from third countries to reform their tax models. There is currently no indication they will do so.

Image source, Council of the EU

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