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EU blacklist shrinks further

Thursday, 8 March, 2018

Next week's meeting of EU Finance Ministers will remove another three countries from the EU's blacklist of 'uncooperative jurisdictions', according to reports.

News agency Reuters says it has seen a document from the EU Tax Code of Conduct Group stating that Bahrain, the Marshall Islands and Saint Lucia have all given undertakings that they will meet the Commission's tax transparency criteria by December 2018, and thus qualify to be promoted to the 'grey list'.

The Code of Conduct Group began compiling the lists in July 2016. Jurisdictions were assessed on their compliance with international standards of tax transparency; fair taxation, essentially meaning no preferential rates for foreign companies; and their plans to introduce measures against profit-shifting, as recommended by the OECD's Base Erosion and Profit Shifting (BEPS) initiative. Countries that failed the tests were given an opportunity to stay off the blacklist by promising to reform their practices.

The blacklist, as first published in December, contained 17 jurisdictions, but eight were removed in January, after giving undertakings to reform: Panama, South Korea, the United Arab Emirates, Barbados, Grenada, Macao, Mongolia and Tunisia.

The Code of Conduct Group's latest amendment will leave only six: Trinidad and Tobago, American Samoa, Guam, Namibia, Palau and Samoa.

Some European Parliament members are unhappy with the blacklist's shrinkage, although it is effectively a continuation of the Commission's 2017 policy of allowing countries to keep off the list by giving appropriate assurances.

EU Member States were not considered for blacklisting, though the Commission has this week identified seven of them - Ireland, Luxembourg, Malta, the Netherlands, Belgium, Cyprus and Hungary - as jurisdictions that 'potentially facilitate aggressive tax planning by multinationals'.