The twenty-eight finance ministers of the European Union adopted this Tuesday a blacklist of 17 countries considered tax havens. This list has been the subject of many negotiations between member states and does not include any European countries.
The member states are thus seeking to combat “tax evasion and fraud because billions of euros are slipping away” from their coffers.
The European Commission initiated this list, which is a response to successive scandals that “revealed various tax evasion schemes: ‘LuxLeaks’ at the end of 2014, ‘Panama Papers’ in April 2016, and ‘Paradise Papers’ in November 2017.”
Three criteria were used by the “experts of the States” to determine the “non-cooperative jurisdictions.”
The first criterion was to ascertain whether the State practices “automatic information exchange.” The second was to determine whether any “harmful preferential tax measures” exist. And the last was to verify the implementation or not of “OECD measures against aggressive tax optimization.”
In total, “92 jurisdictions (states and territories)” were “scrutinized” by the experts. 17 jurisdictions were retained: “Bahrain, Barbados, South Korea, United Arab Emirates, Grenada, Guam, Marshall Islands, Macau, Mongolia, Namibia, Palau, Panama, Samoa, American Samoa, Saint Lucia, Trinidad and Tobago, and Tunisia.”
No EU member country appears on this list. As members of the Union, they are “supposed to apply European law in the fight against tax fraud and evasion.”
Above all, “unanimous voting implies that a country accepts being included on the blacklist.” Unthinkable!
Furthermore, due to a lack of agreement among the twenty-eight, no sanction currently accompanies this blacklist. Some states, including France and Germany, demand “tough sanctions.” In contrast, others like the United Kingdom and the Netherlands believe that “increased surveillance of the flagged states” would be sufficient.
This issue should be addressed in the coming months. Additionally, a European source states that “this blacklist must be regularly updated.”
Grey List
In contrast, a “grey” list has been adopted. This list, composed of 47 countries, includes states with questionable tax practices but that “have decided to comply with the EU’s demands: developed countries have until the end of 2018 to do so, and developing countries until the end of 2019.
For the European Commissioner for Taxation, Pierre Moscovici, “Europe has taken a step, but the fight against tax havens must continue.” In this regard, this list remains for him “an insufficient response given the magnitude of tax evasion on a global scale.”
