Following its release a couple months ago, it seems the European Union is ready to update its controversial tax haven blacklist.
According to Reuters, EU officials have suggested removing eight of the seventeen jurisdictions currently on their blacklist of tax havens.
Officials expect to delist Panama, South Korea, the UAE, Barbados, Grenada, Macao, Mongolia and Tunisia when they meet next week in Brussels following these countries’ commitment to reforming their tax systems and better abiding by the region’s tax policies.
A EU official confirmed this decision and told AFP, “Barring a major surprise, EU finance ministers should remove eight countries from the blacklist of tax havens.”
American Samoa, Bahrain, Guam, the Marshall Islands, Namibia, Palau, Saint Lucia, Samoa, and Trinidad and Tobago will remain blacklisted, while the aforementioned eight will move to the EU’s gray list, which includes a total of forty-seven jurisdictions.
The EU’s Economic Affairs Commissioner Pierre Moscovici confirmed to reporters that “a dozen blacklisted third countries have since December sent additional commitments.”
"It's a good sign, since the purpose of a list is to get out and to get off of it you have to solve the problems that are identified," Moscovici said.
Grenada’s Prime Minister Dr. Keith Mitchell told the Curacao Chronicle that he expects the island nation to be removed from the list by the end of January.
Mitchell believes Grenada should never have been included in the original tax haven blacklist considering that the country had “made high level commitments, complete with timelines, to the EU Code of Conduct group by way of letters on November 17 and 28, 2017.”
Beyond a hit to their reputation, countries on the tax haven blacklist may face fines and other types of punitive measures.
France, according to Bloomberg, is pushing to “[limit] access for listed jurisdictions to the European Fund for Sustainable Development, as well as national initiatives such as reinforced monitoring of transactions, increased audit risks for taxpayers benefiting from the regimes at stake, and special documentation requirements.”
Changes to EU Tax Haven Blacklist Preoccupy Plenty
Tax justice advocates and European politicians have started voicing their concerns over the dilution of the EU’s tax haven blacklist.
In an interview with AFP, Oxfam’s Aurore Chardonnet said, “This is a worrying trend. Just one month after adopting the list they are taking people off,” adding that the EU is “weakening the credibility of the list...which is becoming empty."
Furthermore, German MEP Markus Ferber, who is also a member of the European Parliament’s Economic and Monetary Affairs Committee, considers the decision to remove Panama a mistake, one that essentially makes the EU’s tax haven blacklist “laughable.”
Ferber said that removing “the world’s most prolific tax haven… would be a fatal signal for the EU’s role in fighting tax evasion and money laundering.”
“Panama has built its reputation of a top-notch tax haven and money-laundering hub for years – the Panama Papers are proof of that. To pardon Panama after only a little more than month and a noncommittal letter promising to do better is hard to beat in terms of naivety,” he added.
Panama recently signed up to the OECD’s Common Reporting Standard and will start exchanging information with 97 other jurisdictions as part of the organization’s Multilateral Convention on Mutual Administrative Assistance.
UK Crown Dependencies & Overseas Territories to Be Added to EU’s Tax Haven Blacklist?
In light of the undergoing Brexit negotiations, the European Union is also considering adding several of the UK’s Crown Dependencies and Overseas Territories to the tax haven blacklist.
The European Council is scheduled to discuss whether or not these territories should be included in the list with one official saying they “would go after them.”
According to The Independent, “it looks like Bermuda will be given a clean bill of health by the EU, but that outstanding questions remain for the Turks and Caicos Islands and Anguilla.”
Chair of the UK’s Treasury Select Committee Nicky Morgan, however, believes the Crown Dependencies and Overseas Territories could be potentially used as leverage during the Brexit negotiations.
“I’m sure there is scope for leverage. To be honest, if the EU thinks trade negotiations are going well they won’t make a fuss about our overseas territories. If they think they are not, they will. They will flex their rules according to what suits them best,” Morgan said.
What are your thoughts on the impending changes to the EU’s tax haven blacklist? Has it become farcical or is there some use to this exercise?
Let us know with a comment!