EU agrees on new tax haven blacklist of 17 countries

New Europe / Alexandros Michailidis

Eurogroup finance ministers meeting at the European Council in Brussels, Belgium on Dec. 4, 2017.

EU agrees on new tax haven blacklist of 17 countries


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The bloc has finally agreed on a tax haven blacklist of 17 third countries in December’s Economic and Financial Affairs Council (ECOFIN) on Tuesday.

The much-anticipated list received a ’tepid’ welcome by the EU executive that was expecting a better job from the bloc’s finance ministers. The 17 countries that could potentially face sanctions for failing to bring their standards in line with the EU’s published requirements, are South Korea, Panama, Bahrain, Tunisia, United Arab Emirates, as well as Barbados, Samoa, American Samoa, Grenada, Guam, Macau, the Marshall Islands, Mongolia, Namibia, Palau, St. Lucia and Trinidad and Tobago, according to an ECOFIN announcement. Finally, the cases of 8 countries affected by hurricanes will be assessed next February.

The list is a result of excessive screening of more third countries before the ministers made up their mind that these 17 non-EU countries will be blacklisted, while another 47 will be included in a separate gray list, to be monitored for their compliance with commitments undertaken. As the European Commissioner for Tax Pierre Moscovici has repeatedly said during the last period, the list is both dynamic and a way for those countries to forget their bad practices in order to make their way out of this list of shame.

Is the list enough?

Is this enough? It seems that even today, some member states such as France, think that jurisdictions should also face some form of sanction. “We want this list to be complete and effective. No state should escape responsibilities when it doesn’t firmly combat tax evasion,” said the French finance minister Bruno Le Maire on his way to Tuesday’s ECOFIN meeting in the European Council’s home in Brussels. “This list needs to be effective, meaning that it needs to allow us to take sanctions so that those who don’t respect rules change their behavior.”

Commissioner Moscovici does not seem very content either, underlining however that “this list represents substantial progress. Its very existence is an important step forward. But because it is the first EU list, it remains an insufficient response to the scale of tax evasion worldwide.”

“I, therefore, call on the Finance Ministers to avoid any naivety on commitments,” adds Moscovici, as the third countries that have taken commitments must change their tax laws a”s soon as possible”, according to the Commissioner, urging national governments and ministers to agree swiftly on “dissuasive national sanctions,” and to use all means to keep up the pressure on all of these countries. “We must not accept unfair tax competition and opacity.”

Potential countermeasures that have been tabled on behalf of the European Commission, include limiting access for listed jurisdictions to the European Fund for Sustainable Development, as EU-28 level measures, while the member states could on a country to country bass reinforce monitoring of transactions, increase audit risks for taxpayers benefiting from the regimes at stake or for those using structure involving these jurisdictions.

EU Commission to watch the implementation of commitments

As for the Vice President Valdis Dombrovskis that also attended the meeting on behalf of the EU executive, he said that as a number of third countries have entered into commitments as regard to good tax governance and the European Commission “will be following up those commitments.”

“If countries will be implementing them they won’t be part of the tax list, if we see that countries are not implementing the commitments there is the possibility that they end up on this tax list,” added Dombrovskis.

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