The Council of the European Union announced Tuesday that the EU has amended its blacklist of jurisdictions that it deems uncooperative in tax matters, removing eight jurisdictions from that list.
Those countries are Barbados, Grenada, the Republic of Korea, Macao SAR, Mongolia, Panama, Tunisia and the United Arab Emirates. They have been moved to a “graylist” of what now includes 55 jurisdictions – including the Cayman Islands – that have committed to reforming their tax policies and are subject to further monitoring.
The EU Council stated in its announcement that it agreed a delisting was justified in the light of an expert assessment of the commitments made by the jurisdictions to address deficiencies identified by the EU. In each case, the commitments were backed by letters signed at a high political level, according to the Council, which touted the commitments as a sign that the EU’s blacklist is encouraging reforms.
“Our listing process is already proving its worth,” said Vladislav Goranov, minister for finance of Bulgaria, which currently holds the Council presidency. “Jurisdictions around the world have worked hard to make commitments to reform their tax policies. Our aim is to promote good tax governance globally.”
The decision leaves nine jurisdictions on the list of non-cooperative jurisdictions, out of 17 announced initially on Dec. 5. These are American Samoa, Bahrain, Guam, Marshall Islands, Namibia, Palau, Saint Lucia, Samoa, and Trinidad and Tobago.
“Jurisdictions that remain on the list are strongly encouraged to make the changes requested of them,” the EU Council stated in its announcement. “Their tax legislation, policies and administrative practices result or may result in a loss of revenues for the EU’s member states.”
The Council added that the EU could apply “defensive measures” to countries that do not make recommended changes, but did not specify what those measures may be.
The graylisted jurisdictions have until this December to address deficiencies alleged by the EU.
Cayman, for its part, has fallen foul of a fair tax criterion aimed at tax regimes that facilitate offshore structures that attract profits without real economic activity, according to the EU’s backlist announcement from Dec. 5.
Cayman’s government in turn stated it is “further assessing the fair taxation criterion,” and will work with EU Council officials to address this issue by December 2018.