17 countries are named non-cooperative
On December 5th 2017, after long preparations, EU published the first black list of jurisdictions, which are called non-cooperative and with non-transparent tax regime. Among the 17 countries are:
The Marshall Islands
Trinidad & Tobago
The United Arab Emirates.
There is also a grey list with 47 jurisdictions which already promised to make improvements by the end of 2018
to improve their tax regimes: Andorra; Armenia; Aruba; Belize; Botswana; Cape Verde; Cook Islands; Curaçao; Fiji; Hong Kong SAR; Jordan; Labuan Island; Liechtenstein; Malaysia; Maldives; Mauritius; Morocco; Niue; St Vincent & Grenadines; San Marino; Seychelles; Switzerland; Taiwan, Thailand, Turkey; Uruguay; Vietnam.
to improve transparency: Armenia; Bosnia & Herzegovina; Botswana, Cape Verde; Hong Kong SAR; Curaçao; Fiji; Former Yugoslav Republic of Macedonia; Jamaica; Maldives; Montenegro, Morocco; New Caledonia; Oman; Peru; Qatar; Serbia; Swaziland; Taiwan; Thailand; Turkey; Vietnam
to introduce substance requirements: Bermuda; Cayman Islands; Guernsey; Isle of Man; Jersey; Vanuatu
to commit to OECD’s Base Erosion and Profit Shifting (BEPS) standards: Albania; Armenia; Aruba; Bosnia & Herzegovina; Cape Verde; Cook Islands; Faroe Islands; Fiji; Former Yugoslav Republic of Macedonia; Greenland; Jordan; Maldives; Montenegro; Morocco; Nauru; New Caledonia; Niue; Saint Vincent & Grenadines; Serbia; Swaziland; Taiwan; Vanuatu.
Interesting that there are 8 jurisdictions for which the deadlines to respond on EU quarries were prolonged because of the 2017 hurricanes Antigua and Barbuda, Anguilla, Bahamas, British Virgin Islands, Dominica, St Kitts and Nevis, Turks and Caicos, US Virgin Islands. But these countries will already have to make their conclusions in early 2018.
Other least-developed countries were not screened by EU so far.
Other 20 countries came all-clear to meet EU tax standards.
Let’s go back to the black list of 17 non-cooperative ones. What will happen if they do not commit to EU tax transparency policy There are no definite sanctions yet, but EU Member States are encouraged to set-up countermeasures and implement them into their native legislation, such as
– increased monitoring of transactions
– high-risk audit
– withholding taxes
– anti-abuse provisions
The Member States will still need to agree on the sanctions, however clients are already concerned about many issues which can and will arise, for example
The banks will reject transactions to the black listed countries even before the native legislation outline the countermeasures.
The black and grey listed jurisdictions will make abrupt changes to their legislation (without transition periods) in order to commit to the EU requirements.
The black listed countries will come out with own countermeasures towards EU based companies and beneficial owners.
The outcomes of these concerns we will see very soon.