As part of its efforts to crack down the transfer of illicit funds, the EU broadened its blacklist of tax heavens during an Economic and Financial Affairs Council (ECOFIN) meeting of the bloc’s finance ministers in Brussels on 12 March where they added the United Arab Emirates, Aruba, and Bermuda to a list of flagged nations that was set up in December 2017.
Barbados, Belize, Fiji, the Marshall Islands, Oman, Vanuatu, and Dominica were also added to the list. They join Samoa, Trinidad and Tobago, and three US territories – American Samoa, Guam, and the US Virgin Islands – on the EU’s blacklist.
Three other countries were on the 2017 list, but were later moved to the greylist following commitments they had taken but have now to be blacklisted again for not having followed up, Barbados, United Arab Emirates and Marshall Islands.
“Since it was first adopted in late 2017, the list has proven its worth in promoting a cooperative manner to the EU’s agenda of improving global tax practices, fighting tax avoidance, and improving good governance and transparency. More than 30 jurisdictions have already delivered on their commitment to pass tax reforms,” said Eugen Teodorovici, the Romanian ECOFIN president and Bucharest’s minister of finance.
The countries that have have been flagged by Brussels now face stricter controls on transactions with the EU, although no sanctions have been applied.
The European Union has been monitoring the was certain country’s transfer money through their tax rules, and specifically looking for loopholes that could favour tax evasion.
According to an EU official, Italy and Estonia objected to the United Arab Emirates being placed on the list for the second time. Rome later dropped its objections after obtaining guarantees that the UAE will be removed once compliant-making legislation is adopted.
The European Commission has said that the process of blacklisting countries which openly violate the bloc’s rules on the transfer of funds is “fair” as improvements to the process have been made, including making public, by publishing the material online, any information that is gathered about money laundering from certain countries.
This process has created a framework for dialogue and cooperation with the EU’s international partners, to address concerns with their tax systems and discuss matters of mutual interest. The screening will now be enhanced with more compulsory transparency criteria. Three G20 countries are expected to be added in the next screening, including, Russia, Mexico, and Argentina.