EU removes Panama and seven other jurisdictions from its ‘tax haven blacklist’

The European Council today removed eight jurisdictions from its so-called “tax haven blacklist”, including Panama, following what it said were “commitments made at a high political level to remedy EU concerns” from the countries in question. 

The eight countries – Barbados, Grenada, the Republic of Korea, Macao, Mongolia, Panama, Tunisia and the United Arab Emirates – have been moved to a separate category of jurisdictions, as part of which they will be “subject to close monitoring”, the EC said in a statement today. 

The separate category is sometimes referred to as a “grey list”, since those jurisdictions on it may be moved back to the blacklist if they are found to fall short of the expectations of the EU monitors.

As reported, the announcement had been expected, pending a meeting this week of EU ministers.  Nevertheless, it sparked a protest from some campaign organisations, some of which cited the fact that Panama had featured prominently in the “Panama Papers” expose in 2016 as a reason to keep it off limits to the world’s mainstream financial community.

One of these organisations was Oxfam, the EU policy adviser on tax and inequality of which, Aurore Chardonnet, said the EU’s “rush” to take countries off the blacklist, “without it being clear what they have actually committed to improve….is further undermining the process”.

“It is no secret that tax havens remain at the heart of the EU, with four European countries actually failing the EU’s own blacklisting criteria,” Chardonnet added.

“EU governments should tackle tax havens within the EU with the same urgency they are pressuring other countries to adopt tax reforms that were decided by an exclusive club of rich countries.”

Nine (still) ‘non-cooperative jurisdictions’ 

Today’s decision leaves nine jurisdictions on the list of what the European Council calls “non-cooperative jurisdictions” out of 17 announced initially in December: American Samoa, Bahrain, Guam, the Marshall Islands, Namibia, Palau, Saint Lucia, Samoa and Trinidad and Tobago.

In its statement, the European Council said the ministers had agreed that the de-listings had been considered “justified, in the light of an expert assessment of the commitments made by these jurisdictions to address deficiencies identified by the EU”. However, it noted the decision had been  taken without discussion at a meeting of the Economic and Financial Affairs Council, by means of an amendment to its December conclusions.

“In each case, the commitments were backed by letters signed at a high political level,” the council statement noted.

The European Union drew up the “tax haven blacklist”  in response to growing pressure on it to be seen to be doing something about tax evasion, particularly in the wake of the global financial crisis in 2008, and has been described by its EU organisers as intended to promote good governance in taxation worldwide. The pressure came from a number of sources, including private interest groups and politicians from many EU countries.

The Panama Papers and Paradise Papers exposés, of April 2016 and November 2017 respectively, are seen to have forced an issue that had already been under discussion.

The European Council said the intention is to revise the list at least once a year, although the EC’s  Code of Conduct Group, which is responsible for preparing it, may recommend an update at any time.

At the time the list was unveiled in December, some critics argued that it was incomplete, as it left out a number of jurisdictions seen to be tax evasion facilitators, including Luxembourg and Malta.

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