The European Union, after a lengthy process, has announced on the 5th December 2017 its first Tax Havens Blacklist, being the first EU list of non-cooperative jurisdictions for tax purposes. The said blacklist includes seventeen (17) countries and follow the leak of the Panama Papers and the Paradise Papers which have seen increasing publicity and scrutiny.
In order to determine whether a country is a "non-cooperative jurisdiction" the EU index measures the transparency of the jurisdiction’s its tax regime, tax rates and whether the tax system encourages multinationals to unfairly shift profits to low tax regimes to avoid higher duties in other states. In particular these include tax systems that offer incentives such as 0% corporate tax to foreign companies, but a 0% corporate tax does not automatically mean that a jurisdiction is to be included in this list.
Moving forward, the EU-Member States have been left to decide what action to take against the offenders. Ministers ruled out imposing a withholding tax on transactions to tax havens as well as other financial sanctions, but it would be expected that EU Funding to such jurisdictions shall be affected.
The Blacklist includes:
- American Samoa
- Bahrain, Barbados
- South Korea
- Marshall Islands
- Saint Lucia
- Trinidad and Tobago
- Tunisia; and
- United Arab Emirates
It should also be noted that the EU has also decided on a “Grey List” of countries which the EU has concerns over their tax practices, but for which such countries have committed to introduce and/or amend relevant laws and regulations to amend any potential irregularities.
The EU’s Grey List currently includes forty-seven (47) countries, as follows:
Andorra, Albania, Armenia, Aruba, Belize, Bermuda, Botswana, Bosnia and Herzegovina, Botswana, Cabo Verde, Cayman Islands, Cook Islands, Curacao, Fiji, Former Yugoslav Republic of Macedonia, Guernsey, Hong Kong SAR, Isle of Man, Jersey, Jamaica, Jordan, Labuan Island, Liechtenstein, Malaysia, Maldives, Mauritius, Montenegro, Morocco, Nauru, New Caledonia, Niue, Oman, Peru, Qatar, Saint Vincent and the Grenadines, San Marino, Serbia, Seychelles, Swaziland, Switzerland, Taiwan, Thailand, Turkey, Uruguay, Vanuatu and Vietnam