Barbados, Belize, Curaçao, Mauritius, Saint Lucia and Seychelles have been warned by the EU that some of its tax policies are "harmful" and must be updated to comply with best practices by the end of this year.
The European Union's Code of Conduct Group (Business Taxation has written to each, asking them to make a high-level commitment to abolish or amend the relevant preferential regimes, without introducing any grandfathering mechanisms to water down the impact on non-resident businesses, according to international tax firm EY. Failure to comply will land these international financial centres on the EU's blacklist as a non-cooperative jurisdiction for tax purposes.
Some of the IFCs have already announced extensive revisions of their corporate tax regimes to meet the EU's demands, but have included some grandfathering provisions.
Most of these issues are related to so-called preferential tax measures, rather than the original concerns about tax transparency. As a result, most international financial centres (IFCs) rushed to amend their rules on preferential treatment by the end of 2018.
The (CCG) is currently preparing its recommendations to the EU Council regarding revision of its blacklist of non-cooperative jurisdictions for tax purposes and the final list should be published later this year.
The European Union's watchdog on corporate taxes is stepping up scrutiny of how effective member nations are in challenging tax avoidance strategies used by multinational corporations.
The Code of Conduct Group on Business Taxation said it will specifically focus on how EU nations are using their powers under the EU Anti-tax Avoidance Directive to examine intercompany pricing practices and exchange of information on company tax rulings. Brussels is also considering including member-states on the blacklist.