- Written by CONOR KING DEVITT
- Published: 07 December 2017
The European Union released its list of “non-cooperative” tax jurisdictions on Tuesday, and the Virgin Islands was not included — yet.
The EU’s European Council blacklisted 17 states that allegedly failed to enforce fair tax policies, require adequate levels of tax transparency and/or do enough to regulate profit-shifting tax avoidance strategies. Each of these jurisdictions also failed to commit to changing its ways, according to the EU.
The council also “grey-listed” an additional 47 states that committed to rectify, either by the end of this year or the next, some part of their tax policy or administration deemed out of sync with EU tax standards.
The VI was kept off both lists, but that might not last. In consideration of the destruction wrought by hurricanes Irma and Maria, this territory and seven other Caribbean jurisdictions were given until February to respond to the EU’s concerns, the organisation stated.
Countries on the blacklist will face immediate sanctions: Funding from certain EU financial instruments won’t be allowed to channel through entities in the listed jurisdictions.
Direct funding projects on the ground in these states, however, will still be allowed so as not to interfere with EU sustainability and development goals, according to a European Commission press release.
Multinational corporations in the listed jurisdictions will also face steeper reporting requirements, and individual EU countries will have the option to enforce further sanctions against the jurisdictions on the list.
The EU chose not to apply all rumoured sanctions, like a potential withholding tax on money directed to the listed jurisdictions, according to The Guardian.
As a result, some viewed the agreed list and sanctions as a weak response to so-called “tax havens.”
“This list represents substantial progress,” wrote Pierre Moscovici, the European commissioner for economic and financial affairs, taxation and customs, on Twitter. “But it remains an insufficient response to the scale of tax evasion worldwide.”
The EU blacklisted American Samoa, Bahrain, Barbados, Grenada, Guam, South Korea, Macau, the Marshall Islands, Mongolia, Namibia, Palau, Panama, St. Lucia, Samoa, Trinidad and Tobago, Tunisia and the United Arab Emirates.
Several United Kingdom overseas territories and dependencies — including Bermuda, the Cayman Islands, Guernsey, the Isle of Man and Jersey — found themselves on the grey list.
Each of the abovementioned jurisdictions has committed to addressing “concerns relating to economic substance” by the end of next year, meaning the EU is worried about multinational companies that use offshore structures which attract “profit” in those territories without having any real economic presence.