The EU Council of finance ministers has removed Anguilla, Dominica and Seychelles from the EU list of non-cooperative jurisdictions for tax purposes.
All three had previously been placed on the list because they did not meet the EU’s tax transparency criteria of being ranked as at least ‘largely compliant’ with the rules for the exchange of information on request, by the OECD Global Forum.
The Global Forum previously decided to grant these jurisdictions a supplementary review.
The Cayman Islands was taken off the EU tax list by the EU Council one year ago, after adding to its regulatory framework for investment funds.
Nine jurisdictions remain on the EU list of non-cooperative jurisdictions: American Samoa, Fiji, Guam, Palau, Panama, Samoa, Trinidad and Tobago, US Virgin Islands and Vanuatu.
The countries face reputational damage, greater scrutiny of their financial transactions and may lose access to EU funding.
The EU tax blacklist has been subject to growing criticism because it includes mostly small island nations that are not known for having significant financial services sectors that would be in any way relevant for the European Union.
Earlier this year the European Parliament passed a resolution demanding the EU’s criteria for inclusion on the list should specifically target zero-tax jurisdictions.
In a response to a parliamentary question in June 2021, Commissioner Paolo Gentiloni, said the current EU list of non-cooperative jurisdictions for tax purposes includes countries that have failed to implement commitments undertaken with the EU.
“The size of their gross domestic product (GDP) or of their territory, as well as their geographical location, are not relevant for listing purposes,” he said.
But Gentiloni added that the Commission believes there is room to revisit and strengthen the EU listing criteria.
The current criteria focus on tax transparency, fair taxation and prevention of tax base erosion and profit shifting. The list is reviewed twice a year.
Anguilla, Dominica, Seychelles on grey list
Pending the granted supplementary review, Anguilla, Dominica and Seychelles are now included in the ‘state of play document’, which includes jurisdictions that do not yet comply with all international tax standards, but that have committed to implementing tax good governance principles.
Costa Rica, Hong Kong, Malaysia, North Macedonia, Qatar and Uruguay have also been added to this document, while Australia, Eswatini and Maldives have implemented all the necessary tax reforms and have therefore been removed from it.
Following today’s revision, Turkey continues to be mentioned in Annex II. In its conclusions of February 2021, the Council called on Turkey to commit to automatic information exchange with all member states. Even though progress has since been made, further steps need to be taken, the EU Council said.