The Virgin Islands was added late last month to the European Union’s “grey list” of tax jurisdictions. The International Tax Authority, above, handles cross-border tax matters in the territory. (Photo: CLAIRE SHEFCHIK)

The Virgin Islands has been added to the European Union’s “grey list” along with nine other jurisdictions in the Caribbean and elsewhere, the EU Council announced after its meeting on Feb. 24.

Besides the VI, the EU added the Bahamas, Belize, Bermuda, Israel, Montserrat, Russia, Tunisia, the Turks and Caicos Islands, and Vietnam, bringing the total list up to 25 jurisdictions.

Although the inclusion does not mean that any penalties or sanctions will be levied against the territory, according to the EU, the move represents a significant setback after the territory rushed through economic substance legislation at the end of 2019 in order to meet EU requirements on tax reform.

In a Feb. 24 press release, the EU Council said that the list reflects “ongoing EU cooperation with its international partners and the commitments of these countries to reform their legislation to adhere to agreed tax good governance standards.”

The countries on the grey list are working toward meeting the EU’s tax standards, the release stated.

According to the EU, criteria for the list cover tax transparency, fair taxation and preventing tax base erosion and profit shifting. The organisation called implementation of the list a “dynamic process,” and noted that the next revision is scheduled for October of this year.

Anguilla, Botswana, Costa Rica, Dominica, Hong Kong, Jamaica, Jordan, Malaysia, North Macedonia, Qatar, the Seychelles, Thailand, Turkey and Uruguay were previously added and remain on the grey list.

The blacklist, which remained unchanged after last month’s announcement, currently includes American Samoa, Fiji, Guam, Palau, Panama, Samoa, Trinidad and Tobago, the United States Virgin Islands, and Vanuatu.

VI response

At a press conference late last month, Premier Andrew Fahie urged onlookers not to view the move as a censure of the territory.

He said the grey-listing meant the VI has “substantially met all international tax standards set out by the EU, but that ongoing improvements are being made to implementing tax good governance.”

As a result, he said, it has been grey-listed while it implements policies and procedures in the territory’s Country-by-Country Reporting framework.

“No defensive measures flow from being on such list and the BVI is still a cooperative jurisdiction,” he said. “Once the BVI meets these commitments, it will be removed from the annex.”

He added that the territory “takes its international obligations seriously” and had already been finalising the necessary steps to ensure successful implementation of the recommendations.

This week, BVI Finance CEO Elise Donovan directed queries to the Premier’s Office. Director of Communications Dr. Arliene Penn said, “BVI’s addition to EU’s Annex II is a positive rating for us because it acknowledges that BVI is a cooperative jurisdiction that has implemented measures (in the case of the Country-by-Country Reporting) in accordance with the high international standards prescribed. The BVI remains highly committed to the transparency and international cooperation agenda.”

The EU has hinted for some time that it would seek to modify its requirements for the list, the latest iteration of which was announced last October.

In February 2021, the European parliament passed a resolution calling for a measure that would automatically blacklist British territories like the VI, the Cayman Islands and the Channel Islands that have a zero percent corporate tax rate — and that now have a weakened voice in the EU in the wake of the United Kingdom’s split from the organisation.

The resolution did not mention the VI at the time, but it came before the revelation that nearly two-thirds of companies named in the far-reaching Pandora Papers investigation last year were based in the VI.

Panama, which is already on the EU blacklist, was host to the second highest number.

World response

Meanwhile, the EU Observer reported late last month that tax-reform campaigners are already applauding the news.

Chiara Putaturo, a campaigner with the non-profit Oxfam, praised the move, but complained that the Cayman Islands was not included.

“If the [new] grey-listing … is confirmed, we will see some real tax havens finally at risk to be blacklisted [in the future],” she said. “However, there are still other tax havens that are left off the hook, … such as the Cayman Islands, because the criteria remain weak.”


As in other OTs, leaders in the VI have long criticised the EU’s blacklists as arbitrary and misleading, maintaining that the territory’s financial services industry is tightly regulated in keeping with international standards.

Nevertheless, the VI was grey-listed along with other jurisdictions in 2017. In March 2018, the EU concluded that the VI, the Bahamas and Cayman needed further technical guidance from the EU and had until the end of 2019 to adapt local legislation, which resulted in the Economic Substance Act being rushed through the House of Assembly in late 2018.

Thanks to this move, the VI was white-listed, alongside 16 other jurisdictions, in February 2020.