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EU releases list of 'blacklisted' jurisdictions

06/12/2017 News Team

The European Council of Finance Ministers has released a list of countries it deemed to be non-cooperative tax jurisdictions.

Some 17 countries feature on the list including American Samoa, Bahrain, Barbados, Grenada, Guam, Republic of Korea, Macao SAR, Marshall Islands, Mongolia, Namibia, Palau, Panama, Saint Lucia, Samoa, Trinidad and Tobago, Tunisia and United Arab Emirates. 

These jurisdictions are considered not to have taken meaningful action or engaged in dialogue to effectively address their deficiencies. 

This assessment, which was approved by ECOFIN, follows an intensive year-long screening process by the EU Code of Conduct Group on Business Taxation (the Code Group). 

Amongst the jurisdications that have been reaffirmed as cooperative by ECOFIN is Guernsey. Guernsey Finance chief executive Dominic Wheatley said that the island is committed to the "highest international standards" of compliance, tax transparency and neutrality, and was always confident in the outcome of this process.  

 “Guernsey recognises the need for tax transparency and compliance with international standards, and we fully respect the need to maintain good relationships with key markets. The Government of Guernsey is regularly liaising with authorities in those markets, including the EU, to address any issues of clarity or concerns that they may have."

He added: “Guernsey has already committed to the OECD BEPS action plan, with which we are fully compliant, while early adoption of other global initiatives such the Common Reporting Standard evidences our long-standing commitment to international standards of transparency and information exchange – standards that have been endorsed by the likes of the UK, the OECD, the EU and the IMF. We are by no means reluctant followers of this agenda, but enthusiastic advocates and conscientious participants.”

Jersey has also been cleared from inclusion in its register of “blacklisted” jurisdictions. It and the Isle of Man, along with the Cayman Islands and Bermuda, instead appear on a list of those who have committed by the end of 2018 to reform their tax structures. This  “grey” list  covers  47 countries which do not meet the EU tax standards but have pledged to change their rules to improve their tax arrangements.

Jersey's Chief Minister, Senator Ian Gorst, said: “This outcome reflects the Island’s commitment to the highest standards of tax transparency and information exchange. We cooperated fully with the Code Group throughout the screening process, and have actively pursued a good neighbour policy in our relations with the EU. These positive interactions have borne fruit.

In order to secure its continued status as a cooperative jurisdiction, Jersey has made a written commitment to address concerns identified by the Code of Conduct Group, by the end of next year. These concerns specifically relate to a perceived lack of legal substance requirements that could lead to profits being registered in Jersey that do not demonstrate real economic activity. 

The Chief Minister confirmed: “We have committed to working with the Code Group on their concerns over economic substance and they have fully accepted that commitment. Our discussions may include creating enhanced reporting obligations or changes to our legislation on economic substance. We have already begun the necessary preparations, having regard to the Code Group requirements and Jersey’s best interests. I am committed to ensuring that, working with the finance industry, this process will be completed by the end of 2018.” 

The Premier of Bermuda, which retained its status as a cooperative tax jurisdiction, welcomed the continued dialogue with the Code Group. The Hon E David Burt JP, MP, Premier of Bermuda, commented: “Once again the EU has recognized Bermuda’s status as a cooperative jurisdiction, despite the interest surrounding a hack on a global law firm and related documents in the public domain. Bermuda is not a place to hide money, given its Common Reporting Standard and Country by Country automatic reporting regimes and membership in the OECD Inclusive Framework on Base Erosion & Profit Shifting."

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