The European Union is going to add three Caribbean countries to its list of uncooperative jurisdictions in tax matters.
According to a draft decision by the Council of the European Union, EU finance ministers will place Anguilla, the Bahamas, and the Turks and Caicos Islands on the name-and-shame tax list.
Nine other countries that were on already the list will remain there. They are American Samoa, Fiji, Guam, Palau, Panama, Samoa, Trinidad and Tobago, the US Virgin Islands, and Vanuatu.
The changes to the tax blacklist are set to be approved by EU finance ministers without further discussion on 4 Oct.
The EU said Anguilla, the Bahamas, and the Turks and Caicos Islands all facilitate offshore structures aimed at attracting profits without real economic substance.
The countries had failed to take all necessary actions to implement economic substance requirements effectively.
In addition, Anguilla still awaits a supplementary review of its tax information exchange regime.
And the Bahamas has yet to implement a country-by-country reporting standard developed by the Inclusive Framework on Base Erosion and Profit Shifting (BEPS).
The Bahamas has committed to the implementation of the so-called BEPS Action 13 so that it will either be reflected in a peer review in the autumn of 2023 or result in reporting relationships with all EU member states by an agreed deadline.
Panama remains on the list as it is not rated at least “largely compliant” in relation to tax information exchange on request and has a harmful foreign-source income exemption regime, the EU document said.
The EU claims its list aims to strengthen “tax good governance”, fair taxation and global tax transparency to tackle tax evasion and avoidance by putting pressure on countries to reform their tax regimes.
Listed countries typically face reputational damage, greater scrutiny of their financial transactions and may lose access to EU funding.
The Cayman Islands was removed from the tax list in October 2020 after reforming its regulatory framework for investment funds.
This included passing almost 20 pieces of legislation in response to EU pressure, including amendments to mutual funds legislation and a new Private Funds Act.
Cayman had previously introduced economic substance legislation to meet EU demands, implemented country-by-country reporting and established new beneficial ownership reporting rules.
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