ECOFIN publishes final tax haven ‘blacklist’, unveils new transparency rules

The European Union’s Economic and Financial Affairs Council yesterday added three countries to its “tax haven blacklist” – the Bahamas, St Kitts and Nevis and the US Virgin Islands – and deleted three others, as its efforts to promote greater international transparency continued.

The final total of nine jurisdictions also includes American Samoa, Guam, Namibia, Palau, Samoa and Trinidad & Tobago.

In their meeting, in Brussels, the ECOFIN ministers also agreed on new transparency requirements for tax intermediaries, which it said in a statement were designed to prevent corporate tax avoidance through the use of cross-border schemes.

The new EU requirements will mandate that all intermediaries “such as tax advisers, accountants and lawyers” report to the authorities any tax planning schemes that could be considered to be “aggressive”, while EU member states “will be required to share that information automatically, enabling measures to be taken to block harmful arrangements”, ECOFIN said.

Noting that “enhancing transparency is key to our strategy to combat tax avoidance and tax evasion”, Vladislav Goranov, minister for finance of Bulgaria, which currently holds the ECOFIN presidency, added: “if the authorities receive information about aggressive tax planning schemes before they are implemented, they will be able to close down loopholes before revenue is lost.”

The Council said its decision to tweak its list of “non-cooperative jurisdictions” – as the “blacklist” is formally known – had been made in the light of commitments made by  jurisdictions that had originally been on the list, and an assessment of jurisdictions for which no listing decision had previously been taken.

In addition to removing three more countries from its draft list of non-cooperative jurisdictions – Bahrain, the Marshall Islands, and Saint Lucia – ECOFIN added four names to its “grey” list, which it calls “annex II”, saying this was “justified by commitments made to address deficiencies identified by the EU” which it said had been assessed by EU experts “and their implementation will be carefully monitored”.

The four names added to this grey list were Anguilla, Antigua and Barbuda, the British Virgin Islands and Dominica.

Allowance made for September’s hurricanes

In comments accompanying the publication of the final blacklist and details of the new regulations, ECOFIN noted that when it first published its non-cooperative jurisdictions list in December the council agreed to put on hold a screening of the tax systems of a number of Caribbean jurisdictions that had been struck by hurricanes a few months earlier.

It then restarted the listing process in January,  after which it said it had decided to add the Bahamas, Saint Kitts and Nevis and the US Virgin Islands to the list “because they failed to make commitments at a high political level in response to all of the EU’s concerns”.

“The process continues with regard to an eighth Caribbean jurisdiction, the Turks and Caicos Islands, from which a commitment at a high political level is being sought by 31 March to address EU concerns,” ECOFIN said.

17 countries on draft list in December

As reported, there were some 17 countries on ECOFIN’s original blacklist draft, back in December  (see left). These included Panama, which was among eight jurisdictions almost immediately de-listed, in January – a move which drew widespread criticism, given the jurisdiction’s association with the “Panama Papers” revelations in April, 2015.

This was in part because the EU’s determination to draw up a tax haven blacklist had been given a fresh impetus by the Panama Papers publicity.

The European Council has said that it intends to update its tax haven blacklist 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.

A number of the jurisdictions named as “uncooperative” by the EU ministers immediately protested their being singled out, and said they would see to it that their names were removed from the list.

The government of St Kitts and Nevis, for example, issued a statement saying it had made “concrete commitments” to the EU during its talks, “to amend the relevant legislation to address the EU’s concerns”, and that it remained “optimistic that these commitments will persuade EU’s partners to remove the federation from the list of non-cooperative jurisdictions for tax purposes and allow for a framework of cooperation and dialogue moving forward.”

The jurisdiction’s officials noted that St Kitts and Nevis had been found to be a “largely compliant” jurisdiction by the Organisation for Economic Co-operation and Development, and that it had been a  signatory to the Multilateral Convention on Mutual Administrative Assistance for Tax Matters since 2016.

To read the ECOFIN statement on its list of non-cooperative jurisdictions and its new regulations for tax intermediaries, click here. 


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