The new EU list of non tax – cooperative countries

The list preparation is a dynamic process that shall continue in 2018 and that will have different phases. It is foreseen that a letter will be sent to all countries forming part of the list, explaining the decision to include them in it as well as the measures that they can take to be removed from it. The first ever list of the EU of non –cooperative countries has just been agreed by the Finance Ministers of the EU member States on December 05.

The purpose of this new tax measure is to fight tax evasion and avoidance and aims to prevent tax abuse on a large scale. The list is composed of 17 countries. In addition to these, there are 47 territories that must comply the criteria fixed by the EU to avoid being included in such list.

✔The list preparation is a dynamic process that shall continue in 2018 and that will have different phases. It is foreseen that a letter will be sent to all countries forming part of the list, explaining the decision to include them in it as well as the measures that they can take to be removed from it. The list will be subsequently updated on an annual basis, monitoring whether the measures are accomplished as well as whether new territories need to be included.

✔The criteria that are taken into account with respect to a country or territory, for the purposes of updating the list are:

• Respect to fiscal transparency, focusing on whether the jurisdiction compromises in implementing the legal process to adopt the OECD automatic exchange of information rules or enters into force the OECD Mutual Administrative Assistance Multilateral Convention on tax matters.
• Respect to the fair tax competition, focusing on whether the jurisdiction has harmful tax practices or regimes or it encourages artificial tax structures, lacking of real economic activity.
• Application of the OECD anti – BEPS measures and shifting of profits.

✔The list integrating countries are: American Samoa, Bahrain, Barbados, Granada, Guam, Republic of Korea, Macao SAR, Marshall Islands, Mongolia, Namibia, Palau, Panama, Santa Lucia, Samoa, Trinidad and Tobago, Tunisia and United Arab Emirates.

✔This measure has no precedents and it does constitute an authentic mechanism to pressure the before mentioned territories so that they change their tax conduct. The list should have a real impact on the countries concerned, as they may face restrictions to channel funds from the EU through entities in listed countries, the public Country – by- Country reporting proposal includes stricter reporting requirements for multinationals with activities in listed jurisdictions and the Commission has encouraged Member States to agree on coordinated sanctions to apply at a national level against the listed jurisdictions.