The list was first introduced in 2017, highlighting “harmful tax practices” based on three main criteria: tax transparency, good governance and real economic activity.
The existence of a zero corporate tax rate was added to the selection criteria as well.
Jersey and Guernsey were on the 2017 so-called ‘greylist’, which meant they had agreed to amend their legislation within a certain time frame to comply with EU regulation. As a result, the Commission removed them from the list.
On the other hand, the UAE went from being ‘greylisted’ to being blacklisted, as it failed to follow up on its commitments.
Younis Haji Al Khoori, undersecretary of the UAE ministry of finance, said: “The UAE is committed to all international agreements and standards. The ministry of finance is currently working with all stakeholders at local and international levels to reach a plan that meets all the required standards within the specified period of time.
“We are confident that the European Union will lift the United Arab Emirates’ name from its list of non-cooperative jurisdictions for tax purposes, and we look forward to moving on to the next phase of cooperation with the relevant authorities in the European Union on other important issues related to tax cooperation between the two parties.”
The 2019 blacklist
Since the introduction of the first non-compliance list, the EU has monitored 92 jurisdictions over the course of 2018, urging them to amend domestic legislation and structures to comply with international requirements.
However, EU finance ministers have now blacklisted 15 countries, either for not taking action on the concerns highlighted in 2017, or for not following up on their commitments.
American Samoa, Guam, Samoa, Trinidad and Tobago stayed on the blacklist due to their lack of commitment in meeting the concerns expressed by the Commission.
On the other hand; Aruba, Barbados, Belize, Bermuda, Dominica, Fiji, Marshall Islands, Oman, the United Arab Emirates and Vanuatu were moved from the ‘greylist’ to the blacklist.
On top of that, Belize was also featured as one of the preferred destinations for British billionaires to relocate to and take advantage of its low-tax regime.
The list’s impact
“The EU tax havens list has had a resounding effect on tax transparency and fairness worldwide,” Pierre Moscovici, EU commissioner for economic and financial affairs, taxation and customs, said.
“Thanks to the listing process, dozens of countries have abolished harmful tax regimes and have come into line with international standards on transparency and fair taxation.
“The countries that did not comply have been blacklisted, and will have to face the consequences that this brings. We are raising the bar of tax good governance globally and cutting out the opportunities for tax abuse.”
Channel Island delight
At the same time, Jersey and Guernsey commented on their removal from the ‘greylist’ as recognition of their respective “commitment to meet global standards on financial services regulation”.
Dominic Wheatley, chief executive of Guernsey Finance, said: “This is a real endorsement of Guernsey as a co-operative jurisdiction and further indication of our ongoing commitment to meeting international standards.
“Our government has engaged actively on this issue in a short time frame, and industry has recognised the importance of this issue and engaged accordingly.”
Ian Gorst, Jersey’s minister for external relations, echoed this sentiment: “Jersey has consistently maintained that we are a jurisdiction of substance, and we have worked quickly and effectively to introduce economic substance legislation, meeting a commitment made to the [EU’s] Code [of Conduct] Group in November 2017.
“We will continue to work proactively with the Code Group, as part of our commitment to meeting global standards on financial services regulation and to further our good neighbour policy with the EU.”
List still faces criticism
While the Commission deemed the updated blacklist a “success”, there is still criticism surrounding the fact that no European country ever featured either on the 2017 or the revised 2019 list.
Source: European Commission