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European Commission creates blacklist of tax havens

Tuesday, 12 March, 2019 - 01:02

European Union finance ministers are expected to approve a new version of the “European blacklist of tax havens” in Brussels on Tuesday. It could be raised by the Commission to fifteen countries if the twenty-eight leaders follow the recommendations of the Community institution.

This list reportedly includes American Samoa, Guam, Samoa, Trinidad and Tobago, the United States Virgin Islands, Barbados, the United Arab Emirates, the Marshall Islands, Belize, the island of Aruba , Bermuda, Dominica, Fiji, Oman and Vanuatu.

The Commission has also drawn up a “gray list” of 34 jurisdictions that still have very questionable tax practices, but have made a written commitment to amend them by the end of this year. Included in this list are Mongolia, Namibia, Palau or Saint Lucia.

In December 2017, the Commission provoked a controversy,  after it made the  “blacklist” publicSome capitals had challenged the methodology, and NGOs had regretted that it excluded EU member countries.

At the time, the blacklist had 17 names (Samoa from the United States, Bahrain, Barbados, the United Arab Emirates, South Korea, Grenada, Guam, Macau, Palau, Panama, etc.) and 47. To avoid being blamed, the courts had to meet three criteria: compliance with the Organization for Economic Co-operation and Development (OECD) automatic data exchange standards, lack of a mechanism that favors the establishment of offshore companies (such as the existence of a zero tax rate on companies), and compliance with the guidelines for combating tax evasion by multinational companies in the OECD.

Finally, seven other jurisdictions move from the gray list first version to the black list second version, for the same reasons, namely commitments made end 2017, but not held since: Aruba, Belize, Bermuda, Fiji, Oman, Vanuatu and Dominica.

Pierre Moscovici, the Commissioner for Economic and Monetary Affairs, who promoted the list, said it has contributed to the removal of more than one hundred damaging tax regimes in the world. The commission plans to continue its vigilance and is expected to announce Tuesday that it will expand its audit of the jurisdictions to Russia, Mexico and Argentina.

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