EU adds 10 countries to blacklist of non-cooperative tax jurisdictions

The countries on the list have failed to meet EU requirements on tax transparency, and have not implemented commitments made to the EU by an agreed deadline.

The countries added to the list (14 page / 265KB PDF) are Aruba, Barbados, Belize, Bermuda, Dominica, Fiji, the Marshall Islands, Oman, United Arab Emirates and Vanuatu. They join American Samoa, Guam, Samoa, Trinidad and Tobago and the US Virgin Islands on the black list of non-cooperative countries.

A total of 21 jurisdictions have been taken off the grey list of countries still being monitored, including UK crown dependencies Guernsey, Jersey and the Isle of Man.

Tax expert Catherine Robins of Pinsent Masons, the law firm behind Out-Law.com, said:

“Jersey, Guernsey and the Isle of Man have now been deemed to be cooperative jurisdictions after changing their laws so that only companies satisfying economic substance tests can get the benefit of being treated as tax resident in these jurisdictions.”

Those removed from the grey list also include Panama, the jurisdiction at the centre of the ‘Panama Papers’ leak of documents connected with the use of offshore tax structures by individuals and companies in 2016.

The Panama Papers scandal was a major catalyst behind the development of the list, followed up by the 2017 ‘Paradise Papers’ leak of similar documents.

A total of 11 jurisdictions have been granted extensions to deliver promised reforms to deliver on commitments on tax transparency. Meanwhile a further 34 countries remain under scrutiny on the grey list, including those which the EU said needed more time to reform their “harmful preferential tax regimes”, jurisdictions which faced genuine constitutional or institutional issues last year, and those rated as partially compliant by the  Global Forum on Transparency and Exchange of Information for Tax Purposes.

The list was originally published in December 2017 and at that time featured 17 third-country jurisdictions judged to be non-cooperative, out of a group of 92. A further 47 jurisdictions were placed on the grey list.

Robins said firms with business connected to countries on the blacklist would need to be extra-vigilant.

“Being a blacklisted jurisdiction means that financial institutions will have to carry out increased due diligence on customers connected to the jurisdiction. It will also make it more likely that transactions will be reportable under the EU’s new mandatory disclosure ‘DAC 6’ rules which will require intermediaries to disclose certain cross-border tax arrangements,” Robins said.

In a speech at the Economic and Financial Affairs Council last week European Commission vice-president Valdis Dombrovskis said the list was “a valuable policy tool, because it impacts and changes global tax practices for the better”.

Non-EU countries are assessed for cooperation on the basis of their tax transparency, including compliance with international standards of automatic exchange of information and information exchange on request; fair tax competition; and commitment to implement international minimum standards on base erosion and profit shifting.