EU names uncooperative tax jurisdictions


The European Union on 5th December, 2017 published the first list of non-cooperative jurisdictions that have failed to meet the EU standards on tax transparency. CATA member countries are among the 17 jurisdictions that have appeared in the EU ‘black list’ following a compliance review based on the EU standards on tax transparency. The listing comes hot on the heels of the recently released Paradise Papers that highlighted how certain jurisdictions are being used to facilitate aggressive tax planning, tax evasion, and other illicit financial activities.

To meet the EU standards in tax transparency, a jurisdiction must:

(i)Have achieved a ‘Largely Compliant’ status under the G20/OECD tax transparency standards;

(ii)Have in place ‘fair taxation’ system harmful tax practices; and

(iii)Have committed to the BEPS implementation i.e. membership of the ‘Inclusive Framework’.

The affected CATA countries include Barbados, Namibia, Samoa, St Lucia, Trinidad and Tobago, and Grenada. Other countries appearing in the list are American Samoa, Tunisia, Macau, The Marshall Islands, Palau, South Korea, Mongolia, Guam, Bahrain, United Arab Emirates, and Panama.

According to the communication released by the EU, the cited jurisdictions may face ‘defensive measures’ such as ineligibility for EU funding. It is likely that in future other tougher sanctions may be adopted against the non-cooperative jurisdictions.

In recent years countries have come under immense pressure to implement measures that would ensure transparency in the area of tax and more particularly to have a robust platform for exchange of tax information. The Global Forum - through their work on exchange of information on request (EOIR) and automatic exchange of information (AEOI) - has been leading this process and has come up with its own standards/criteria for peer reviews. On the other hand, the G20/OECD has a similar criterion for identifying non-cooperative regimes.

While the benefits of tax transparency are apparent to all, the myriad of standards to be implemented is no doubt proving a challenge to many countries, particularly the developing countries which are still struggling with legislative and institutional reforms that would facilitate exchange of information. It is curious to note that some jurisdictions appearing in the EU list have been accorded a ‘Largely Compliant’ status by the Global Forum reviews. Such inconsistencies would be avoided if the standards are harmonised. But more importantly, there is need for wider and constant consultation among all stakeholders if these standards are to qualify as ‘international’ standards.

More information on the EU listing

Gerry Cook