UK and International Tax news

EU Revises List Of Non Cooperative Jurisdictions

Friday 26th January 2018

The Council of the EU has recently revised the list of non-cooperative jurisdictions in taxation matters published in December 2017 and removed eight jurisdictions from the so called Black List.

The jurisdictions deleted from the original list include Barbados, Grenada, Korea, Macao, Mongolia, Panama, Tunisia, and UAE.

The EU’s original list was established following a screening and a dialogue conducted during 2017 with a large number of third country jurisdictions. Those that appeared on that list failed to take meaningful action to address deficiencies identified and did not engage in a meaningful dialogue on the basis of the EU’s criteria. They made no such commitment at a high political level in time for the Council meeting.

In 2016, the Council established three criteria, in particular, that:

  • a jurisdiction should fulfil to be considered compliant on tax transparency;
  • a jurisdiction should fulfil to be considered compliant on fair taxation;
  • anti-BEPS (tax base erosion and profit shifting) measures are being implemented.

The EC pre assessed 213 countries using over 1600 different indicators in order to classify them according to their economic ties to the EU, financial activity, legal and institutional stability, and good tax governance levels.

Of the 213 countries selected, 92 were chosen for screening, 20 were given the all clear whilst the other 72 were asked to address deficiencies. 47 committed to improve transparency, stop harmful tax practices, introduce substance requirements and implement OECD BEPS measures. 8 hurricane countries have been given more time. This left 17 countries which were placed on the EU list.

In October 2017, letters were sent to all jurisdictions concerned, informing them of the outcome of the work. Where necessary, a political commitment was requested within a specified timeframe to addressing all deficiencies identified.

Most jurisdictions chose to engage with the EU process through a constructive dialogue, and to take steps towards resolving issues identified.

Since December 2017, new commitment letters were received from eight jurisdictions and, after assessment of the commitments made, the Council of the EU [ECOFIN] agreed that those jurisdictions be moved from Annex 1 to Annex II of the original Council paper. The jurisdictions that remain on the list have been strongly encouraged to make the changes requested of them. Their tax legislation, policies and administrative practices result or may result in a loss of revenues for the EU’s member states.

Pending such changes, the EU and the member states could apply defensive measures including both taxation measures and measures outside the field of taxation, aimed at preventing the erosion of the EU member states’ tax bases.

If you would like further information on the above, please contact Keith Rushen on 0207 486 2378.

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