UK and International Tax news

EU Publishes List Of Non Cooperative Jurisdictions

Thursday 7th December 2017

The EU has published a list of 17 non-cooperative jurisdictions in taxation matters – the EU Black List – and it has also agreed on applying ‘defensive’ measures with regard to the listed jurisdictions.

The jurisdictions that appear on the list include American Samoa, Bahrain, Barbados, Grenada, Guam, Korea, Macao, Marshall Islands, Mongolia, Namibia, Palau, Panama, St Lucia, Samoa, Trinidad and Tobago, Tunisia, UAE.

The EU’s list was established following a screening and a dialogue conducted during 2017 with a large number of third country jurisdictions. Those that appear on the list failed to take meaningful action to address deficiencies identified and did not engage in a meaningful dialogue on the basis of the EU’s criteria. They made no such commitment at a high political level in time for the Council meeting.

In November 2016, the Council established three criteria, in particular, that:

  • a jurisdiction should fulfil to be considered compliant on tax transparency;
  • a jurisdiction should fulfil to be considered compliant on fair taxation;
  • anti-BEPS (tax base erosion and profit shifting) measures are being implemented.

Work on the list started in July 2016 within the Council’s working group responsible for implementing an EU code of conduct on business taxation, in coordination with its high-level working party for taxation. In September 2016, the EC pre assessed 213 countries using over 1600 different indicators in order to classify them according to their economic ties to the EU, financial activity, legal and institutional stability, and good tax governance levels.

Of the 213 countries selected, 92 were chosen for screening, 20 were given the all clear whilst the other 72 were asked to address deficiencies. 47 have committed to improve transparency, stop harmful tax practices, introduce substance requirements and implement OECD BEPS measures. 8 hurricane countries have been given more time. This left 17 countries which have been placed on the EU list.

During 2017 the working group, supported by the Council’s secretariat, oversaw the screening, a technical dialogue with the jurisdictions concerned and an analysis of their tax systems. The Commission provided technical support to the process and this enabled the situation in those jurisdictions to be assessed against the EU’s criteria.

In October 2017 letters were sent to all jurisdictions concerned, informing them of the outcome of the work. Where necessary, a political commitment was requested within a specified timeframe to addressing all deficiencies identified.

Most jurisdictions chose to engage with the EU process through a constructive dialogue, and to take steps towards resolving issues identified. They have submitted in writing a firm political commitment as requested. Progress made on those commitments will be monitored as set out in the Council’s conclusions.

For jurisdictions affected by natural disasters, it was agreed to put the process temporarily on hold. This refers in particular to countries affected by hurricanes during 2017 which will be asked to address the concerns identified as soon as the situation improves, with a view to resolving them by the end of 2018. By February 2018, they will be contacted to prepare the next steps.

The jurisdictions that appear on the list are strongly encouraged to make the changes requested of them. Their tax legislation, policies and administrative practices result or may result in a loss of revenues for the EU’s member states.

Pending such changes, the EU and the member states could apply defensive measures including both taxation measures and measures outside the field of taxation, aimed at preventing the erosion of the EU member states’ tax bases.

If you would like further information on the above, please contact Keith Rushen on 0207 486 2378.

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