EU finance ministers have added 10 more countries onto the EU’s blacklist of tax havens, which seeks to help prevent tax fraud, embezzlement and evasion and encourage cooperation and positive action – “not to name and shame,” said Eugen Teodorovici, minister of public finance of Romania, which is currently at the EU’s helm. The five countries originally on the list were Samoa, Trinidad and Tobago, American Samoa, Guam and the US Virgin Islands. Now, Aruba, Barbados, Belize, Bermuda, Dominica, Fiji, Marshall Islands, Oman, United Arab Emirates and Vanuatu have also been added.
These countries are blacklisted because they have shown no efforts to change their tax legislation and failed to implement reforms. The list was created in December 2017 to encourage fairer tax practices, competition and transparency while preventing and stopping tax fraud, avoidance and evasion. In contrast, the blacklisted countries facilitate widespread tax evasion by companies and individuals and did not meet EU deadlines for reform. The criteria for including or removing the countries on and off the blacklist include transparency, information exchange standards, signed bilateral agreement for exchange, fair tax competition, no harmful tax regimes/practices, and the implementation of standards through country reporting.
EU lawmakers are also discussing including other criteria linked to beneficiary ownership transparency. While the blacklist surely has an impact on trade and reputation, no sanctions have been announced yet. There is also a “grey list” for countries whose tax practices are being scrutinized and given more time to carry out reforms. There are 62 jurisdictions that were given one year, until the end of 2018, to comply with the EU’s tax expectations.