While it has not been made clear what sanctions the jurisdictions on the list face, the EU has come under pressure to make an example of non-compliant jurisdictions for tax purposes since the recent recent Paradise Papers scandal.
Several island jurisdictions, including Bermuda, Jersey, Guernsey and Cayman successfully made last ditch efforts in November to avoid being blacklisted.
On 4 December, the Jersey Evening Post reported that a senior tax specialist said Jersey would “almost certainly” not be included on the blacklist.
The specialist, John Riva KPMG’s head of tax, told the Post that while Jersey was almost fully compliant with the majority of tax criteria, the Island’s zero percent corporate tax rate could be a sticking point for the EU authorities.
EU states launched the process to blacklist tax havens in February in a bid to crack down on non-compliant tax behaviour.
The Council of the European Union has strongly encouraged the jurisdictions that appear on its list 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, these measures would be aimed at preventing the erosion of the EU member states’ tax bases,” according to the EC statement.
The EU list includes:
Trinidad and Tobago
United Arab Emirates