On December 5, the European Union (EU) released a blacklist of 17 countries for failing to meet agreed tax good governance standards. The list was put together by EU’s Code of Conduct Group (Business Taxation) team, who are responsible for assessing the tax measures for business taxation and overseeing the provision of information on those measures.
A press release by the EU points that this list should “raise the level of tax good governance globally and help prevent the large-scale tax abuse exposed in recent scandals“. This is following the recent Paradise Papers, which had revealed investments by wealthy individuals and entities around the world.
Pierre Moscovici, Commissioner for Economic and Financial Affairs, Taxation and Customs, said:
“The adoption of the first ever EU blacklist of tax havens marks a key victory for transparency and fairness. But the process does not stop here. We must intensify the pressure on listed countries to change their ways. Blacklisted jurisdictions must face consequences in the form of dissuasive sanctions, while those that have made commitments must follow up on them quickly and credibly. There must be no naivety: promises must be turned into actions. No one must get a free pass.”
213 countries were pre-assessed using over 1,600 different indicators. It was mentioned that a letter was sent to jurisdictions with tax deficiencies and was asked to make high-level commitments to address them within a period. Those that did not do so were put forward for the listing.
EU’s Member States have agreed on a set of countermeasures which they can choose to apply to the listed countries. Such measures include increased monitoring and audits, withholding taxes, special documentation requirements and anti-abuse provisions.
The 17 countries in the EU Tax blacklist are:
- American Samoa
- South Korea
- The Marshall Islands
- Saint Lucia
- Trinidad and Tobago
- United Arab Emirates
The list will be updated annually.