On 6 October, 2020 the EU Council has issued a press release dedicated to the regular update of EU list of non-cooperative jurisdictions for tax purposes. This time Anguilla and Barbados have been listed, Cayman Islands and Oman have been de-listed.
Starting from 6 October, 2020 and until the following update planned for February, 2021, next foreign jurisdictions will be included in the EU “blacklist”:
- American Samoa
- Trinidad and Tobago
- US Virgin Islands
As stated in the press release, the reason of listing of Anguilla and Barbados by the EU is their downgrade in the rating of tax transparency in accordance with classification by the Global Forum on Transparency and Exchange of Information for Tax Purposes. The status of Anguilla has been downgraded to “non-compliant” with existing transparency standards (including those of exchange of information on request), Barbados has been marked as “partially compliant”.
In respect of de-listing, Cayman Islands’ reform of collective investment funds undertaken in September, 2020 was the main reason of its exclusion from the EU “blacklist”. The decision to de-list Oman is based on ratification of Convention on Mutual Administrative Assistance in Tax Matters by Oman in July, 2020, adoption of legislation required for automatic exchange of information on financial accounts and taking necessary steps to exchange information with all EU Member States.
Residents of listed jurisdictions may be subject to some administrative measures (enhanced monitoring of transactions and analysis of tax evasion schemes use) and tax measures: controlled foreign companies rules, non-deductibility of costs, application of withholding tax, abolishment of intra-group participation exemption for dividends, etc. EU Member States have reached an agreement to apply at least one of the abovementioned measures obligatorily starting from 2021.
Besides this, some economic measures, such as direct prohibition to carry out investments with the use of EU funds (e.g. proceeding from European Fund for Strategic Investments), may be applicable to residents of listed countries. It is recommended to take the EU “blacklist” into account during implementation of financial or investment operations of any kind.
Mongolia and Bosnia and Herzegovina have been removed from the EU “grey list” because both jurisdictions have ratified the Convention on Mutual Administrative Assistance in Tax Matters. The appearance of a country or a territory in such “grey list” means that listed jurisdiction has made a commitment to eliminate previously detected non-compliance with standards of transparency and exchange of information. At the same time, application of any measures to residents of such jurisdictions by the EU or its Member States is not possible.
Thus, depending on the result of meeting the EU requirements by the jurisdiction, it may be de-listed completely, or it may be removed from the “grey list” to the “blacklist”. As of October, 2020, the following jurisdictions remain in the “grey list”: Australia, Botswana, Eswatini, Jordan, Maldives, Morocco, Namibia, Saint Lucia, Thailand, Turkey. As it was mentioned above, the next regular revision of the EU “blacklist” is planned for February, 2021.