EU unveiled its first-ever blacklist of tax havens

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Tax haven blacklist crosses continents, oceans and languages including U.K. territories and dependencies, Panama, South Korea, Mongolia and the United Arab Emirates. The list, which was issued in Brussels after ratification by the E.U.’s finance ministers, was prepared by European Council’s Code of Conduct Group, a body formed by tax experts drawn from every E.U. country and deals specifically with issues related to business taxation. While not legally binding, the group represents the Union’s effort to “abolish existing tax measures that constitute harmful tax competition” and to encourage countries to “refrain from introducing new ones.”

In issuing its list, the group said it aimed “to promote good governance worldwide” by working to prevent tax fraud and evasion.

The EU list of non-cooperative jurisdictions for tax purposes

1. American Samoa

American Samoa does not apply any automatic exchange of financial information, has not signed and ratified, including through the jurisdiction they are dependent on, the OECD Multilateral Convention on Mutual Administrative Assistance as amended, does not apply the BEPS minimum standards and did not commit to addressing these issues by 31 December 2018.

2. Bahrain

Bahrain does not cover all EU Member States for the purpose of automatic exchange of information, has not signed and ratified the OECD Multilateral Convention on Mutual Administrative Assistance as amended, facilitates offshore structures and arrangements aimed at attracting profits without real economic substance, does not apply the BEPS minimum standards and did not commit to addressing these issues by 31 December 2018.

3. Barbados

Barbados has a harmful preferential tax regime and did not clearly commit to amending or abolishing it as requested by 31 December 2018. Barbados’ commitment to amend or abolish other harmful tax regimes in line with criterion 2.1 will be monitored.

4. Grenada

Grenada has not signed and ratified the OECD Multilateral Convention on Mutual Administrative Assistance as amended and did not clearly commit to addressing these issues by 31 December 2018. Grenada’s commitment to comply with criteria 1.1, 2.1 and 3 will be monitored.

5. Guam

Guam does not apply any automatic exchange of financial information, has not signed and ratified, including through the jurisdiction they are dependent on, the OECD Multilateral Convention on Mutual Administrative Assistance as amended, does not apply the BEPS minimum standards and did not commit to addressing these issues by 31 December 2018.

6. Korea (Republic of)

Korea has harmful preferential tax regimes and did not commit to amending or abolishing them by 31 December 2018

7. Macao SAR

Macao SAR has not signed and ratified, including through the jurisdiction they are dependent on, the OECD Multilateral Convention on Mutual Administrative Assistance as amended and did not commit to addressing these issues by 31 December 2018. Macao SAR’s commitment to comply with criteria 1.1 and 2.1 will be monitored.

8. Marshall Islands

Marshall Islands facilitates offshore structures and arrangements aimed at attracting profits without real economic substance, does not apply the BEPS minimum standards and did not commit to addressing these issues by 31 December 2018. Marshal Islands’ commitment to comply with criteria 1.1 and 1.2 will be monitored.

9. Mongolia

Mongolia is not a member of the Global Forum on Transparency and Exchange of Information for Tax Purposes, has not signed and ratified the OECD Multilateral Convention on Mutual Administrative Assistance as amended, does not apply the BEPS minimum standards and did not commit to addressing these issues by 31 December 2019.

10. Namibia

Namibia is not a Member of the Global Forum on Transparency and Exchange of Information for Tax Purposes, has not signed and ratified the OECD Multilateral Convention on Mutual Administrative Assistance as amended, does not apply the BEPS minimum standards and did not commit to addressing these issues by 31 December 2019. Furthermore, Namibia has harmful preferential tax regimes and did not commit to amending or abolishing them by 31 December 2018.

11. Palau

Palau facilitates offshore structures and arrangements aimed at attracting profits without real economic substance and refused to engage in a meaningful dialogue to ascertain its compliance of with criterion 2.2. Palau’s commitment to comply with criteria 1.1, 1.2, 1.3 and 3 will be monitored.

12. Panama

Panama has a harmful preferential tax regime and did not clearly commit to amending or abolishing it as requested by 31 December 2018. Panama’s commitment to amend or abolish other harmful tax regimes in line with criterion 2.1 will be monitored.

13. Saint Lucia

Saint Lucia has harmful preferential tax regimes, does not apply the BEPS minimum standards and did not clearly commit to addressing these issues by 31 December 2018.

14. Samoa

Samoa has harmful preferential tax regimes, does not apply the BEPS minimum standards and did not commit to addressing these issues by 31 December 2018.

15. Trinidad and Tobago

Trinidad and Tobago has been attributed a rating of “Non Compliant” by the Global Forum on Transparency and Exchange of Information for Tax Purposes, has not signed and ratified the OECD Multilateral Convention on Mutual Administrative Assistance in Tax Matters as amended, has a harmful preferential tax regime and did not commit to addressing these issues by 31 December 2018. Trinidad and Tobago’s commitment to comply with criteria 1.1 and 3 will be monitored.

16. Tunisia

Tunisia has harmful preferential tax regimes and did not commit to amending or abolishing them by 31 December 2018. Tunisia’s commitment to comply with criterion 3 will be monitored.

17. United Arab Emirates

The United Arab Emirates does not apply the BEPS minimum standards and did not commit to addressing these issues by 31 December 2018. United Arab Emirates’ commitment to comply with criteria 1.1 and 1.3 will be monitored.

1. Transparency

1.1 Commitment to implement the automatic exchange of information, either by signing the Multilateral Competent Authority Agreement or through bilateral agreements.

The following jurisdictions are committed to implement automatic exchange of information by 2018:

  • Curaçao
  • Hong Kong SAR
  • New Caledonia
  • Oman
  • Qatar
  • Taiwan

2019:

  • Turkey

1.2 Membership of the Global Forum on transparency and exchange of information for tax purposes and satisfactory rating

The following jurisdictions are committed to become member of the Global Forum and/or have a satisfactory rating by 2018:

  • Curaçao
  • New Caledonia
  • Oman

2019:

  • Bosnia and Herzegovina
  • Cabo Verde
  • Fiji
  • Jordan
  • Montenegro
  • Serbia
  • Swaziland
  • Turkey
  • Vietnam

The following jurisdictions are committed to sign and ratify the MAC or to have in place a network of agreements covering all EU Member States by 2018:

  • Hong Kong SAR
  • New Caledonia
  • Oman
  • Qatar
  • Taiwan

2019:

  • Armenia
  • Bosnia and Herzegovina
  • Botswana
  • Cabo Verde
  • Fiji
  • Macedonia
  • Jamaica
  • Jordan
  • Maldives
  • Montenegro
  • Morocco
  • Peru
  • Serbia
  • Swaziland
  • Thailand
  • Turkey
  • Vietnam

2. “FAIR TAXATION”

2.1 Existence of harmful tax regimes

The following jurisdictions are committed to amend or abolish the identified regimes by 2018:

  • Andorra
  • Armenia
  • Aruba
  • Belize
  • Botswana
  • Cabo Verde
  • Cook Islands
  • Curacao
  • Fiji
  • Hong Kong SAR
  • Jordan
  • Liechtenstein
  • Maldives
  • Mauritius
  • Morocco
  • Saint Vincent and the Grenadines
  • San Marino
  • Seychelles
  • Switzerland
  • Taiwan
  • Thailand
  • Turkey
  • Uruguay
  • Vietnem

The following jurisdictions have not explicitly reiterated the commitment taken at the FHTP to amend or abolish the identified regimes by 2018:

  • Malaysia and Labuan Island

2.2 Existence of tax regimes that facilitate offshore structures which attract profits without real economic activity

The following jurisdictions are committed to addressing the concerns relating to economic substance by 2018:

  • Bermuda
  • Cayman Islands
  • Guernsey
  • Isle of Man
  • Jersey
  • Vanuatu

How will this affect your business?

If you are worried about your current business in jurisdictions on the EU blacklist please contact us to schedule an appointment with Novasigma tax consultants!

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