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European Union updated the list of non-cooperative tax jurisdictions

On March 12, 2019 EU Finance Ministers updated the list of non-cooperating EU tax jurisdictions based on an intensive review and dialogue process conducted by the Commission. The list was successful due to the fact that many countries have changed their laws and tax systems in accordance with international standards.
During the past year, the Commission assessed 92 countries on three criteria - tax transparency, good governance and real economic activity; and on one indicator - the presence of a zero corporate tax rate.
The update shows that this clear, transparent and trustworthy process has led to real changes: 60 countries took measures to solve the Commission’s problems and more than 100 harmful regimes have been eliminated. The list also had a positive impact on internationally agreed standards for proper tax management.
As a result of the commission’s verification, ministers have blacklisted 15 countries.  American Samoa, Guam, Samoa, Trinidad and Tobago and the US Virgin Islands have not made any commitments since the first black list adopted in 2017. Barbados, United Arab Emirates and Marshall Islands were on the 2017 list, but were moved to the gray list after the commitments they made. As for now they should be blacklisted again for non-compliance. Aruba, Belize, Bermuda, Fiji, Oman, Vanuatu and Dominica have been moved from the gray list to the black list for the same reason.
In 2019, a further 34 countries will be monitored (gray list), while 25 countries from the initial selection process have been cleared.
The EU list led to changes in global tax practice that would have been inconceivable just a few years ago. Developed by the Commission and agreed for the first time by member states in December 2017, it is a common tool to combat the risks of tax abuse and unfair tax competition worldwide. The process is fair with improvements made visible in the list and it has increased transparency through country commitment letters published on the Internet. The listing process in the EU has also created the basis for dialogue and cooperation with the EU’s international partners, to solve problems with their tax systems and discuss tax issues of mutual interest. The selection will now be strengthened by complying with more binding transparency criteria, and the next show will add three G20 countries - Russia, Mexico and Argentina.
Regarding the consequences, Member States agreed on a number of countermeasures that they could choose to apply to listed countries, including strengthening monitoring and audits, tax withholding, special documentation requirements and anti-abuse provisions. The Commission will continue to support the work of Member States in developing a more coordinated approach to sanctions for the EU list in 2019. In addition, the new provisions in the EU legislation prohibit sending or transferring EU funds through organizations in countries included in the black list of taxes.
The listing process in the EU is currently dynamic and will continue in the coming years. Thus, the letter will be sent to all jurisdictions in the EU list, explaining the decision and what they can do to exclude from the list. The Commission and the Member States (Code of Conduct Group) will continue to monitor the jurisdictions that should be granted before the end of 2019/2020, and assess whether any other countries should be included in the EU listing process. The Commission will also continue open dialogue and interaction with relevant jurisdictions, providing technical support and clarifications when necessary, and discussing any tax issues of mutual interest.
Source: http://europa.eu/rapid/press-release_IP-19-1606_en.htm
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